he four steps represent a logical way to think about filling out the balance sheet in order to (1) only accept investments with positive NPV,…

Why are the “attractive short-term financing opportunities,” described in the second step of the four-step process, considered before other debt financing? These opportunities are considered…

How is the current ratio used in setting the debt maturity mix? Can you think of any other financial measures that could also be used…

What role does the debt maturity mix play in the firm’s overall risk-return posture? The debt maturity mix is an important input to a company’s…

Why is the debt maturity mix normally simplified to short- vs. long-term debt? What, if anything, is lost in making this simplification? This simplification is…

Even though individual current assets turn over within the annual accounting period, the balance of permanent current assets has a long-term maturity since it will…

Distinguish between individual asset/liability hedging and maturity-range hedging? What type of company can do each? Individual asset/liability hedging, involves matching the maturities of specific assets…

Companies deviate from maturity-range hedging for three primary reasons: (1) Inability to obtain the desired financing – Small businesses often cannot obtain funds in the…

These securities include U.S. Treasury bills, bonds and notes; bonds issued by other federal agencies and by state and local governments; bank instruments including acceptances,…

What factor(s) enter the decisions about the composition of a portfolio of marketable securities? The important factor is the maturity of each security in the…