Long-term capital and follows conservative financing policy

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Reference no: EM131562579

1. Dimon Products' sales are expected to be $5 million this year, with 90% on credit and 10% for cash. Sales are expected to grow at a stable, steady rate of 10% annually in the future. Dimon's accounts receivable balance will remain constant at the current level, because the 10% cash sales can be used to support the 10% growth rate, other things held constant. True or False

2. A firm that follows an aggressive working capital financing approach uses primarily short-term credit and thus is more exposed to an unexpected increase in interest rates than is firm that uses long-term capital and thus follows a conservative financing policy. True or False

Reference no: EM131562579

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