Q. -Under a conservative financing policy a firm would use long-term financing tofinance some of the temporary current assets. What should the firm do when a "dip" in temporary current assets causes total assets to fall below the total longterm financing? (Solved)

1. use the excess funds to pay down long-term debt.

2. invest the excess long-term financing in marketable securities.

3. use the excess funds to repurchase common stock.

4. purchase additional plant and equipment.