Section B - Case 1: AquaHarvest

Scenario: AquaHarvest operates offshore kelp farms. The company experiences highly seasonal sales, leading to fluctuating working capital requirements. The board is debating how to finance these fluctuating current assets.

Question: If AquaHarvest adopts an 'aggressive' working capital financing policy, how will it finance its fluctuating current assets?

Working capital financing policies dictate how a firm funds its current assets. - Conservative: Uses long-term finance for permanent current assets and a portion of fluctuating current assets (low risk, low return). - Matching: Uses long-term finance for permanent assets and short-term finance for fluctuating assets. - Aggressive: Uses short-term finance for all fluctuating current assets and a portion of permanent current assets (high risk, high return).