What is the matching principle of working capital financing, Financial Management

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What is the matching principle of working capital financing?  What are the benefits of following this principle?

The matching principle is while short-term financing is used for temporary current assets while long-term financing is used for permanent fixed assets and current assets.  The major benefit of this approach is that as temporary current assets are sold off the proceeds can be used to pay off the short-term debt.

 


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