Difference between Short term and Long Term financing:---
In contrast long-term financing decisions are involved when a firm purchases a special machine that will reduce operating costs over, say, the next five years.
Following from the earlier explanation that short term borrowing should be used for working capital requirements for day to day operations of a business. Industries with seasonal peaks and troughs and those engaged in international trade will be heavy users of short term borrowing finance.
In contrast long-term financing decisions are involved when a firm purchases a special machine that will reduce operating costs over, say, the next five years.
Following from the earlier explanation that short term borrowing should be used for working capital requirements for day to day operations of a business. Industries with seasonal peaks and troughs and those engaged in international trade will be heavy users of short term borrowing finance.
