Short-vs-long-term-finance-report.docx - SHORT TERM FINANCE...

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SHORT TERM FINANCE VS LONG TERM FINANCEThe primary difference between long-term and short-term financing is in the length of time the debtobligation remains outstanding. Short-term financing involves a loan term that is typically less than oneyear. Conversely, long-term financing is any debt obligation with a loan term that is greater than oneyear. The distinction is important for accounting and tax purposes.Businesses keep a close eye on the money they make and the bills they owe. Anything that is not paidimmediately is financed. Financing is a type of credit or loan that allows a business to take possession ofan asset in the present but not pay for it until sometime in the future. The financing obligation is carriedin the company's accounting system as a liability, or an outstanding amount owed.*Long-Term Sources of Finance*Long-term financing means capital requirements for a period of more than 5 years to 10, 15, 20 years ormaybe more depending on other factors. Capital expenditures in fixed assets like plant and machinery,land and building, etc of business are funded using long-term sources of finance. Part of working capital

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Term
Spring
Professor
N/A
Tags
Finance, short term financing, short term finance, long term finance

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