Framework
Working capital financing strategies
The question it answers
When planning next year's funding, should a CFO finance current assets with short-term or long-term debt to balance return against liquidity risk?
- Origin
- Pike, Neale and Linsley, 2018
- Diagram type
- Comparison table
- Level of analysis
- Firm
Diagram
Working capital financing strategies
| Criterion | Aggressive | Conservative | Matching |
|---|---|---|---|
| Current assets held | Low | High | Moderate |
| Short-term funding share | High | Low | Matched to asset life |
| Expected return | Higher | Lower | Middle |
| Liquidity risk | High | Low | Medium |
Sources
References
Listed A–Z by author surname, Harvard style. A source with a DOI links to https://doi.org/…; one without links to its page or says plainly that it has no DOI.
- Pike, R., Neale, B. and Linsley, P. (2018) Corporate Finance and Investment, 9th edn. Harlow: Pearson.No DOISource page