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  • Business Zafran 19.2

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    zaf
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    Long-term finance includes debt or equity used for non-current assets or expansion that is not expected to be repaid within five years, while short-term finance refers to loans expected to be repaid within one year. Retained profits have the advantage of not costing the business but are only available when profitable, and may be insufficient for large projects if profits are low. Business Zafran should take out a bank loan for their fish farming plans as it would allow them to pay off higher debts and interest from a mortgage while paying off the bank loan.

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    Long-term finance includes debt or equity used for non-current assets or expansion that is not expected to be repaid within five years, while short-term finance refers to loans expected to be repaid within one year. Retained profits have the advantage of not costing the business but are only available when profitable, and may be insufficient for large projects if profits are low. Business Zafran should take out a bank loan for their fish farming plans as it would allow them to pay off higher debts and interest from a mortgage while paying off the bank loan.

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    4 views1 page

    Business Zafran 19.2

    Uploaded by

    zaf
    Long-term finance includes debt or equity used for non-current assets or expansion that is not expected to be repaid within five years, while short-term finance refers to loans expected to be repaid within one year. Retained profits have the advantage of not costing the business but are only available when profitable, and may be insufficient for large projects if profits are low. Business Zafran should take out a bank loan for their fish farming plans as it would allow them to pay off higher debts and interest from a mortgage while paying off the bank loan.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 1

    Activity 19.

    2 Business Zafran

    a.
    Long-term finance = debt or equity used to finance the purchase of non-current assets or finance expansion plans.
    Long-term debt is borrowing a business does not expect to repay in less than five years.

    Short-term finance = loans or debt that a business expects to pay back within one year.

    b.
    The advantages is that there is No cost to the business. The disadvantages is only available when the business is
    profitable. If profits are low then there will not be enough retained profits to fund large investment projects.

    c.
    Yes, they should • Because more money can help
    they started fish farming. As a result, it is possible to pay off the higher debts along with the high interest rates
    associated with the mortgage and then pay off the loan from the bank.

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