Firms manage a variety of current assets. Permanent current assets are needed for the firm to maintain its business, and they will be carried even through downturns in business cycles. Temporary current assets fluctuate seasonally or with business cycles. Each firm must devise a financing strategy that best fits its business situation and best manages its risk. Use the following table to identify the different current asset financing policies.   A. Long-term capital finances all permanent current assets and some temporary financing needs. Aggressive approach   Maturity matching approach   Conservative approach     B. Long-term capital finances all permanent assets, but short-term debt finances temporary current assets. Aggressive approach   Maturity matching approach   Conservative approach     C. Some portion of fixed assets and the nonseasonal portion of current assets are financed with long-term capital, and all seasonal needs of current assets and the remaining portion of fixed assets are financed with short-term loans. Conservative approach   Maturity matching approach   Aggressive approach

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A:

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.