Essay: Temporary Assets in Financing

Sample Essay

The second type of assets with respect to financing are classified as temporary assets which are also referred to as seasonal assets. The funds required to finance these assets are termed temporary or seasonal requirements. The fixed assets of the company are permanent in nature whereas some or all current assets are termed as temporary. The fixed assets of Wave Satellites remain unchanged throughout the previous whereas current assets of the firm vary from month to month in the previous year of operations.

The minimum level of current assets required in a month is $25,000 for January which is assumed as the minimum necessary level of current assets required each month. Any level of current assets above this minimum level of $25,000 is assumed to be temporary or seasonal which is required for operations in a specific month to cater to seasonal requirements as opposed to requirements each month. Fixed assets of the company are permanent in nature therefore they are not included in the calculation of temporary requirements of the company.

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