Question

Explain briefly the purposes for which long term finance is required by business concerns?

Answer 1

The funds which are not paid back within a period of less than a year are referred to as long-term finance. Certain long-term finance options directly form a part of the permanent capital of the firm. In such cases, the repayment obligation does not even arise. such as bank loans, bonds, leasing, and other forms of debt finance. and public and private equity instruments. The primary purpose of obtaining long-term funds is to finance capital projects and carrying out operations on an expansionary scale. Such funds are normally invested into avenues from which greater economic benefits are expected to arise in the future.