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AFP CTP Question # 46 Topic 5 Discussion

CTP Exam Topic 5 Question 46 Discussion:
Question #: 46
Topic #: 5

A CFO is concerned about cash flow and the risk of defaulting on the debt covenants due to the ongoing recession. The company is a net borrower with a syndicated credit agreement consisting of:

-an operating loan available in USD and CAD

-a commitment of an $80.0 million USD long-term loan with a quarterly repayment of $1.5 million

What asset financing strategy should the CFO utilize to reduce overall financial risk?
A.

Utilize short-term financing to achieve better financial metrics.

B.

Long-term financing should be used to finance fluctuating current assets.

C.

Permanent current assets and fixed assets should be financed with long-term financing.

D.

Finance all long-term assets and only a portion of current assets with long-term financing.

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Actual exam question for AFP CTP exam by Rai65697 at May 4, 2026, 4:07:27 AM

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