How are the major sources of funds evaluated to meet a firm's short-term and long-term financial needs?
Established firms have several sources of short-term funds: bank loans (can be extended with good credit), trade credit (when suppliers ship materials to a firm on credit), factoring (provide immediate cash to firms by purchasing their accounts receivable at a discount), & commercial paper (short-term IOUs). Equity financing (funds provided by owners) and long-term debt financing can be done by firms to build up their permanent financial base.