If the firm adopts a hedging (maturity matching) approach to financing, each

asset will be compensated by the same estimated maturity of the financing

instrument. Short-term or seasonal variations in current assets will be funded by
short-term debt and long-term debt or equity will be financed by the permanent
portion of current assets.
If businesses are aware of the potential revenue demand, the resulting receivable
collections and the production plan with certainty, they will be able to arrange
their debt maturity schedule to precisely match the future net cash flow
schedule..
What amount of existing assets to retain and how to fund current assets are
independent are the two primary considerations of working capital management.
These two variables must be collectively considered because of their
independence..