DISCUSSION QUESTIONS.

1. "The most appropriate financing pattern would be one which asset build-up and length of financing terms are perfectly matched." Discuss the difficulty involved in achieving this financing pattern.

2. By using long-term financing to finance part of temporary current assets, a firm may have less risk but lower returns than firms with a normal financing plan. Explain the significance of this statement.

3. A firm that uses short-term financing methods for a portion of permanent current assets is assuming more risk but expects higher returns than with firm with a normal financing plan. Explain