Choice "A" is correct. The working capital financing policy that finances permanent current assets with short-term debt subjects the firm to the greatest risk of being unable to meet the firm's maturing obligations.
Choices "c" and "d" are incorrect. The use of long-term debt financing produces the smallest risk of being unable to meet maturing obligations.
Choice "b" is incorrect. Although financing fluctuating current assets with short-term debt exposes the firm to some risk, it is not the greatest or the smallest.
