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Hedging Approach For Determining Finance Mix In Working Capital Management

Hedging Approach For Determining Finance Mix In Working Capital Management:

Hedging approach is also known as matching approach. Under this approach, the business concern can adopt a financial plan which matches the expected life of assets with the expected life of the sources of funds raised to finance assets.

[Post Image Courtesy of Num_Skyman at FreeDigitalPhotos.net]

When the business follows matching approach, long-term finance shall be used to fixed assets and permanent current assets and short-term financing to finance temporary or variable assets.

About Author Mohamed Abu 'l-Gharaniq

when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries.

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