The use of long-term sources of finance instead of short-term sources tends to decrease operating income.

Question

The use of long-term sources of finance instead of short-term sources tends to decrease operating income.​

Quizplus · Accepted Answer

Long-term sources of finance, such as long-term loans or equity financing, typically have lower interest rates compared to short-term sources like overdrafts or short-term loans, leading to potentially lower finance costs and not directly affecting operating income, which is calculated before financing costs.

The Use of Long-Term Sources of Finance Instead of Short-Term