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A short-term financing strategy is most applicable when debts have to be repaid within a certain timeline, such as within a year. A long-term financing strategy is more applicable when debt needs are not time-sensitive, such as mortgages or vehicles. One method is not necessarily preferable to the other, it depends on the situation.

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Question: Post Chapter Discussion: Chapter-1.1 Tuesday, 21 February 2023, 2:36 PM Number of replies: 12 Provide an example of a short-term financing strategy and a long-term financing strategy. In what financial scenario would each strategy be most applicable? Is one method preferable to the other? Explain your rationale.

Asked by nirmal_singh

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Short-term financing strategies include lines of credit, factoring, and leasing. Long-term financing strategies include debt issuance, venture capital, and private equity. A short-term financing strategy is usually selected when a business needs to meet working capital requirements such as inventory and payroll. A longer-term financing strategy is usually employed to raise large sums of capital for strategic investments or acquisitions. It ultimately depends on the needs of the business. If a business needs to raise capital quickly, then a short-term financing strategy may be preferable. On the other hand, if the business needs to raise larger sums of capital for a longer period of time, then a long-term financing strategy may be preferable. Ultimately, the decision should be made after careful assessment of both financing options and the financial situation of the business.

Answered by text-davinci-003

Feb. 22, 2023, 9:35 a.m.

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Published: Wednesday, February 22, 2023