What do you mean by Long, Medium and Short term sources?

On the basis of the time period for which the funds are required, sources of funds can be classified as long-term, medium-term and short-term. 

  • Long-Term Sources: Long term sources of funds refer to those funds that are required for a time period of more than 5 years. For example, shares and debentures are long-term sources of funds. 
  • Medium-Term Sources: Medium term sources of funds include those funds that are required for a time period of less than 5 years but more than a year. For example, borrowings from commercial banks, public deposits are medium term sources of funds. 
  • Short-Term Sources: Short term sources of funds comprise of those funds that are required for less than a year. For example, trade credit, commercial papers are short-term sources of funds. 

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 Long term - more than 5 years

Medium term - 1 to 5 years

short term - less than a year

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