Question

Current assets of a business firm should be financed through

Options

• current liability only

• long-term liability only

• both types (i.e. Long and short liabilities)

• None of the above

Answer 1

both types (i.e. Long and short liabilities)

Explanation -

Current assets are assets that can be turned into cash or cash equivalents in a short period of time and give liquidity to a company. Both forms of liabilities (short and long) can be utilised to finance a company's current assets.