{"id":33720,"date":"2024-04-15T09:20:44","date_gmt":"2024-04-15T09:20:44","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=33720"},"modified":"2024-04-15T09:20:44","modified_gmt":"2024-04-15T09:20:44","slug":"permanent-working-capital-is-generally-financed-through","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/permanent-working-capital-is-generally-financed-through\/","title":{"rendered":"Permanent working capital is generally financed through"},"content":{"rendered":"<p>[amp_mcq option1=&#8221;Long-term capital funds&#8221; option2=&#8221;Goverment assistance&#8221; option3=&#8221;Internal financing&#8221; option4=&#8221;Short-term loans from banks&#8221; correct=&#8221;option3&#8243;]<!--more--><\/p>\n<p>The correct answer is: <strong>C. Internal financing<\/strong><\/p>\n<p>Permanent working capital is the portion of working capital that is needed to finance the firm&#8217;s normal operations on a day-to-day basis. It is typically financed through internal sources, such as retained earnings and cash flow from operations.<\/p>\n<p>Long-term capital funds are used to finance long-term assets, such as plant and equipment. Government assistance is not a common source of financing for working capital. Short-term loans from banks are typically used to finance temporary working capital needs, such as seasonal fluctuations in sales.<\/p>\n<p>Here is a more detailed explanation of each option:<\/p>\n<ul>\n<li><strong>A. Long-term capital funds<\/strong> are used to finance long-term assets, such as plant and equipment. These funds can come from a variety of sources, including debt, equity, and hybrid securities. Debt financing involves borrowing money from a lender, such as a bank or a bondholder. Equity financing involves selling shares of ownership in the company to investors. Hybrid securities combine features of debt and equity financing.<\/li>\n<li><strong>B. Government assistance<\/strong> is not a common source of financing for working capital. However, there are some government programs that can provide financial assistance to businesses, such as the Small Business Administration (SBA). The SBA offers a variety of loan programs, as well as grants and other forms of assistance.<\/li>\n<li><strong>C. Internal financing<\/strong> is the most common source of financing for permanent working capital. This includes retained earnings, which are the profits that a company keeps after paying taxes and dividends, and cash flow from operations, which is the cash that a company generates from its day-to-day business activities.<\/li>\n<li><strong>D. Short-term loans from banks<\/strong> are typically used to finance temporary working capital needs, such as seasonal fluctuations in sales. These loans are usually repaid within a year.<\/li>\n<\/ul>\n<p>I hope this explanation is helpful. Please let me know if you have any other questions.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>[amp_mcq option1=&#8221;Long-term capital funds&#8221; option2=&#8221;Goverment assistance&#8221; option3=&#8221;Internal financing&#8221; option4=&#8221;Short-term loans from banks&#8221; correct=&#8221;option3&#8243;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[700],"tags":[],"class_list":["post-33720","post","type-post","status-publish","format-standard","hentry","category-business-finance","no-featured-image-padding"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Permanent working capital is generally financed through<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/permanent-working-capital-is-generally-financed-through\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Permanent working capital is generally financed through\" \/>\n<meta property=\"og:description\" content=\"[amp_mcq option1=&#8221;Long-term capital funds&#8221; 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