ABSTRACT
According to the maturity matching principle, asset and liability maturities should be matched and finance should be raised according to the maturity of the asset(s) to be purchased. For example, fixed assets, such as land and property, should be financed from long-term sources of finance (e.g. equity or mortgage debentures). For other fixed assets, such as machinery and vehicles, medium-term leasing and hire purchase finance would be appropriate. Peak, cyclical current asset requirements should be financed from short-term sources such as a bank overdraft.
