Firms use long-term financing for
A)assets they expect to convert to cash in the short run.
B)assets to be used over long periods.
C)liabilities they expect to convert to cash in the short run.
D)liabilities to be used over long periods.
E)shareholders' equity they expect to convert to cash in the short run.

Question

Quizplus · Accepted Answer

Long-term financing is used to fund assets that will be used over long periods, such as property, plant, and equipment, and intangible assets. This type of financing typically involves borrowing money that must be repaid over several years or decades. By using long-term financing, firms can spread out the cost of these assets over their useful lives and avoid the need to generate large amounts of cash upfront.

Firms Use Long-Term Financing for