What is the hedging principle or principle of self-liquidating debt?

What will be an ideal response?

The hedging principle, or principle of self-liquidating debt, involves matching the cash-flow-generating
characteristics of an asset with the maturity of the source of financing used to fund its acquisition.
For example, a seasonal expansion in inventories, according to the hedging principle, should be financed with a
short-term loan or current liability. The funds are needed for a limited period, and when that time has passed, the cash
needed to repay the loan will be generated by the sale of the extra inventory items.
Obtaining the needed funds from a long-term source (longer than 1 year) would mean that the firm would still have
the funds after the inventories they helped finance had been sold. In this case the firm would have "excess" liquidity,
which it would either hold in cash or invest in low-yield marketable securities until the seasonal increase in
inventories occurs again and the funds are needed. The result of all this would be lower profits.