Which of the Following Statements Regarding How a Firm Should

Multiple Choice

Which of the following statements regarding how a firm should finance its cash needs is true?

A) Permanent working capital should be financed by long-term sources of funds, while temporary working capital should be financed by short-term sources of funds.
B) Permanent working capital should be financed by short-term sources of funds, while temporary working capital should be financed by long-term sources of funds.
C) Both permanent working capital and temporary working capital should be financed by short-term sources of funds.
D) Both permanent working capital and temporary working capital should be financed by long-term sources of funds.
E) Permanent working capital should be financed by long-term sources of funds, while temporary working capital should only be paid for with cash.