$($FINANCE QUESTION$)$ Working Capital Management

A popular theory for managing risk to the firm that arises out of its management of working capital involves following the principle of self$-$liquidating debt. Discuss how this principle applies to each of the following situations.

Applewood Homes owns a chain of senior housing complexes and is presently debating whether it should borrow short or long term to raise $$5$ million in needed funds. The funds are to be used to expand the firm$$s care facilities, which are expected to last $10$ years.

XYZ Chemicals needs $$2$ million to purchase inventory to support its growing sales volume. They do not expect the need for additional inventory to diminish in the future.

HomeBake is making financial plans for the coming year and expects that during the months of November through January it will need an additional $$5$ million to finance the seasonal expansion in inventories and receivables.