Sources of finance. Define short, medium and longer term financial sources.?

Question

what are sources of finance. Define short term, medium term and long term sources. How would you like to finance if you have surplus money?

Answer 1

As far as definitions go,

1) Short-term is anything up to 1 year,
2) Medium-term is somewhere between 5 to 10 years, and
3) Long-term is over 10 years.

As to the sources of funding, there are a whole bunch places companies can go to obtain money. The could turn to the stock markets (equity) or bond markets (debt). They can also factor (sell) their accounts receivable (uncollectables). They could sell CDs and other corporate investments. They could borrow from other companies (promissory notes).

The KEY is to do a cost-benefit analysis to see which way to go is the better. Not an exact science, but there are some techniques that can help.

Answer 2

Accounting rules define short term debt as being less than one year. Everything else would be defined as long-term. However, outside of accounting, medium could include notes that are shorter than ten years in maturity.

If you have surplus money, you are not in need of financing.

Answer 3

There are two sources of financing, debt and equity. Debt can be short-term (less than one year), medium-term (1-10 years), or long-term (10+ years). Equity is usually considered a long-term source.

If you have surplus cash, you don't need to finance; your need to invest. Alternatively, you can pay down your debt, pay dividends, or buy stock back from shareholders.