Short-Term And Long-Term Finance
Financial resources can be categorized into short-term and long-term. While short-term finance is utilized for short-term requirements, long-term finance is deployed to meet both long-term and short-term uses.
Our sources of short-term finance include:
a. Sundry Creditors
b. Bank Borrowings For Working Capital
c. Deposits / Borrowings From Friends, Relatives And Others
d. Advances Received From Customers
Our sources of long-term finance include:
i) Equity / Owner’s Capital And Deposit
ii) Term Loans From Financial Institutions And Banks
iii) Seed Capital, Margin Money And Subsidy From Government And Financial Institutions.
Besides the above external sources, there is an internal source of funds that is generated by the industry itself through retention of profits or conversion of assets into funds. However, since we have just started operations, this would take some time to build up.
For sound financial health of any industry, it is essential that short-term finance be utilized for acquisition of current assets, only which are normally converted into cash within one year. Long-term finance, on the other hand, is utilized for acquiring fixed assets as also partly for financing current assets, that is, for meeting margin on working capital.
Financial resources can be categorized into short-term and long-term. While short-term finance is utilized for short-term requirements, long-term finance is deployed to meet both long-term and short-term uses.
Our sources of short-term finance include:
a. Sundry Creditors
b. Bank Borrowings For Working Capital
c. Deposits / Borrowings From Friends, Relatives And Others
d. Advances Received From Customers
Our sources of long-term finance include:
i) Equity / Owner’s Capital And Deposit
ii) Term Loans From Financial Institutions And Banks
iii) Seed Capital, Margin Money And Subsidy From Government And Financial Institutions.
Besides the above external sources, there is an internal source of funds that is generated by the industry itself through retention of profits or conversion of assets into funds. However, since we have just started operations, this would take some time to build up.
For sound financial health of any industry, it is essential that short-term finance be utilized for acquisition of current assets, only which are normally converted into cash within one year. Long-term finance, on the other hand, is utilized for acquiring fixed assets as also partly for financing current assets, that is, for meeting margin on working capital.