Question

In: Finance

Discuss long term and short term financing. In your financial plan and are you focusing on...

Discuss long term and short term financing. In your financial plan and are you focusing on long term or short term financing? Explain.

Solutions

Expert Solution

Long term financing is generally raised for the longer period of time and it will be including all such financing which are related to more than one year and it would be including all search finance for long term goals.

Short term finance will be related to fulfillment of the short term objectives and it is related to raising of finance for less than one year and these are having a higher rate of interest than the long term finance and short term finance are raised by the company for working capital purposes generally.

I personally do not want any debt because I am highly averse to use of debt capital as they can lead to risk related to overall solvency of an individual.

If I would have to raise the debt ,Iwould be rather looking for long term financing because it will be providing me with better flexibility and conservatism because I will have to make the payment in the long run by proper planning.


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