Long Term Financing Paper How To Homework
It is not necessary to purchase assets in order to use them.
Railroad and airline companies in the United States, for instance, have acquired much of their equipment by leasing it.
The interest cost of term loans varies with the size of the loan and the strength of the borrower.
This trade credit, as it is commonly called, is the largest single category of short-term credit.
Commercial bank lending appears on the balance sheet as notes payable and is second in importance to trade credit as a source of short-term financing.
Banks occupy a pivotal position in the short-term and intermediate-term money markets.
As a firm’s financing needs grow, banks are called upon to provide additional funds.
A single loan obtained from a bank by a business firm is not different in principle from a loan obtained by an individual. Repayment is made in a lump sum at maturity or in installments throughout the life of the loan.