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Financing: Long Term and Short Term - Essay Example

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Finance & Accounting
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Title: Financing: Long-term and Short-term Heather Jenks Corporate Managerial Finance BUS 657 Instructor: John Brock Introduction Any form of investment or business need to acquire finance that they will use in one way or the other in order to get established…

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Financing: Long Term and Short Term

There are two major categories of financing that normally exist in most businesses (Jim, 2011). These categories are short term and long term financing methods. These categories basically differ in the period for which they are provided to the business. For instance, short term financing is a type of financing that is provided for a short period of time, usually not exceeding one year, to the business. On the other hand, long term financing is any type of finance source for a business that is provided for a long period of time, usually exceeding one year, to the business. This paper aims at discussing the two categories of financing, their applications, examples, current trends and real experiences with the two categories of financing. Short-term Financing This is the type of financing for a business that is normally required for a short period of time, usually less than one year (Pagirl, 2009). It is normally required by the business in order to provide the working capital for the business. The working capital is the capital that is used by the business to purchase raw materials required by the business on a daily basis, payment of salaries and wages, and to meet the day to day expenses of the business (KreditnaBanka, 2012). For example, a company like Nestle may require performing a number of activities in the coming months. ...
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