Short-term financing is an inappropriate source of finance to acquire long-term assets.

Question

Short-term financing is an inappropriate source of finance to acquire long-term assets.​

Quizplus · Accepted Answer

Short-term financing typically refers to financing that is expected to be repaid within a year or less, while long-term assets such as buildings or equipment have a useful life of more than one year. Using short-term financing to acquire long-term assets could lead to cash flow problems and potentially default on the loan. Long-term financing, such as a mortgage or equipment financing, would be a more appropriate source of finance for acquiring long-term assets.

Short-Term Financing Is an Inappropriate Source of Finance to Acquire