Final answer:
Increased use of long-term financing is a conservative approach to current asset financing because it matches the duration of assets with the financing duration, avoiding short-term refinancing risks. Hence, the statement is 'A True'.
Step-by-step explanation:
The question relates to a financial management strategy regarding the use of long-term financing in relation to current asset financing. It is indeed true that the utilization of long-term financing sources, such as issuing bonds or taking longer-term loans, is considered a more conservative financing approach for managing a firm's current assets. This effectively matches the duration of assets with the duration of their financing, reducing the risk of having to refinance in the short term and potentially at less favorable terms.
Companies entertain different methods of raising capital such as bank borrowing, issuing bonds, or selling stock. Each method has its advantages and drawbacks. For instance, borrowing does not dilute the ownership of a company but requires interest payments, while selling stock does not require interest payments but does dilate ownership and control.
Considering these aspects, a firm that opts for long-term financing is viewed as more conservative because it seeks stability over time by aligning the maturity of its assets and liabilities, rather than risking the needs to refinance or repay loans in an unfavorable and potentially volatile short-term financial environment. Therefore, the correct option is 'A True'.