Business Administration 1220E Chapter Notes -Trade Credit, Accounts Payable, Accounts Receivable

• School: Western University
• Department: Business Administration
• Course: Business Administration 1220E
• Professor: Poulopoulos

Document Summary

The cost, availability, and conditions must be analyzed for each source in order to obtain the right fit for the firm. Financing sources are usually categorized as either short-term or long-term. Enterprises can obtain short-term financing from trade creditors, chartered banks, factor companies, and the short-term money market. It is usually for a period of less than one year. Can take place over a period of 10 years or longer and is most often used to finance the acquisition of fixed assets (e. g. , major building expansions, major retooling of assembly lines, etc. ) Equity financing refers to the original money invested by common and preferred shareholders plus new issues of stock and all profits (after dividend payments) retained in the business. This money is seldom repaid: individuals, investment companies and pension plans are the major purchasers (owners) of preferred and common stocks. Long-term interest rates are influenced by current and projected market conditions.