The statement "With the maturity matching strategy, all fixed assets are funded with long-term financing" is incorrect.
The maturity matching strategy is a financial principle that involves matching the maturity of assets and liabilities to minimize liquidity risk. However, it does not dictate that all fixed assets should be funded with long-term financing.
In the maturity matching strategy, short-term assets are financed with short-term liabilities, and long-term assets are financed with long-term liabilities. This approach aims to align the maturity dates of assets and liabilities to ensure that cash inflows from the assets can cover the cash outflows required to repay the liabilities.
Fixed assets, such as buildings and equipment, are typically financed with long-term debt or equity, which have longer maturity periods. This allows companies to spread out the repayment of these assets over an extended period.
On the other hand, current assets, such as inventory and accounts receivable, are usually financed with short-term sources, like trade credit or short-term loans. This shorter-term financing is suitable for assets that are expected to be converted into cash within a year.
Therefore, the correct statement is that "With the maturity matching strategy, fixed assets are funded with long-term financing" is incorrect. The maturity matching strategy focuses on aligning the maturity of assets and liabilities but does not require all fixed assets to be funded with long-term financing.