It is best to use long-term debt to support increases in inventories and accounts receivable.

Question

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Long-term debt should not be used to support increases in inventories and accounts receivable because these are short-term assets and using long-term debt to finance them can lead to financial instability in the long run. Short-term debt or working capital financing should be used to support short-term assets like inventories and accounts receivable.

It Is Best to Use Long-Term Debt to Support Increases