What is the policies for financing current asset?

Answer 1

Financing current assets involves strategies to ensure that a company has sufficient liquidity to meet its short-term obligations. Policies may include maintaining an optimal balance between short-term and long-term financing, utilizing lines of credit, and managing working capital effectively. Companies often assess their inventory turnover and accounts receivable collection periods to optimize cash flow. Additionally, firms may implement strict credit policies to mitigate the risk of bad debts while ensuring adequate funding for operational needs.