week 5 - The sources of long term financing are - Debt ,...

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Unformatted text preview: The sources of long term financing are - Debt , Derivatives & Equity financing by long-term interest loans to finance long- term investment projects & fixed assets. Equity- By going for intial public offer ( IPO ) & diluting the stake of company to raise funds. Derivatives is another method of financing long-term investments using future derivatives like swaptions, forward contracts, future contracts & options. Short term financing is a type of finance which is required for a period of less than an year. the short-term finance is used for working capital requirements of the company. four sources of short-term financing are - TRADE CREDITS, ADVANCES FROM THE CUSTOMERS, COMMERCIAL BANKS & FINANCIAL INSTITUTIONS . trade credits - these are credits in the form of the goods given by one firm to another to buy goods. the range of credit period lies between 15 day to 3 months depending upon the terms & conditions of the trade credit...
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