A company may use matching strategy where source of finance has some maturity with the life of assets being financed.
An aggressive policy uses more of short-term finance for the current assets (permanent working capital) requirement of the firm whereas as conservative policy employs more of long-term finance.
An aggressive policy is risky – it implies less liquidity for the firm since funds are arranged on short-term basis when required. It lead to greater returns, no costs will be paid when the finance is not used. Could generate settlement problems.
A conservative policy employs more of long-term sources of finance (enhancing liquidity). This may however, be associated with lower returns since the cost of funds has to be met irrespective of whether its being used.