BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Short-term funds
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debt funds
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long-term funds
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equity funds
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Detailed explanation-1: -As these assets have long term implication on the business in terms of growth and profitability, they should be financed through long term liabilities such as long term loans, preference shares, retained earnings, etc.
Detailed explanation-2: -Answer: The financing of long term assets should be made form long term funds. Explanation: Any financial instrument with a maturity of more than one year (such as bank loans, bonds, leasing, and other kinds of debt finance), as well as public and private equity instruments, is considered long-term finance.
Detailed explanation-3: -Diversifies Capital Portfolio – Long-term financing provides greater flexibility and resources to fund various capital needs, and reduces dependence on any one capital source. It also enables companies to spread out their debt maturities.
Detailed explanation-4: -Equity and debt financing are the most commonly referred to, but both are forms of long-term financing.