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Long-Term Financing Policy For Target Corporation

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Long-term Financing Policy for Target Corporation

Definition of long term finance
The Long term financing is a form of financing that is provided for a period of more than a year. Long term financing services are provided to those business entities that face a shortage of capital. There are numerous long term sources of finance.
Long term finance is completely different from short term financing which is normally used to provide money that has to be paid back within a year. The period may be less than one year as well.
Equity is a form of long-term financing, such as when a company issues stock to raise capital for a new project.
Purpose of Long Term Finance:
• Finance fixed assets
• Finance the permanent part of working capital.
• Expansion of companies for growth
• Increasing …show more content…

For example, the long term financing that is provided to a solo proprietorship is different from the one received by a partnership firm.
Uses of Long Term Financing:
Long term financing is used in distinct ways by different types of business entities. The business entities that are not companies are only supposed to use long term financing for the purpose of debt. However, the companies can use long term financing for both debt and equity purposes.

Sources of Long Term Financing:
Following are the various sources of long term finance are as follows –
Shares: shares are issued to the general community/public. The shares holders are the owners of the business. These may be of two types of shares:
• Equity shares and
• Preference shares
Debentures: These are also issued to the general community/public. The debentures holders are the creditors of the company/organization.
Public Deposits: General public also likes to deposit their savings with a popular and well proven company which can pay interest from time to time and pay-back the deposit when

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