Business Life Cycle and Cash Flow
Business Life Cycle and Cash Flow
Some companies may have greater amount of longer term debt than others because such organizations may be taking measures to reduce volatility to unfavorable fluctuation in interest rates. This is because short-term interest rate tends to be more volatile than longer term debt . Companies at their startup stage may want to employ long-term debt for this reason and escape short-term debt burden. Some organizations use more long-term debt because all other sources of financing such as owners’ contributions may have been exploited while these entities have no sufficient retained earnings.
Relationship between Business Life Cycle and Debt Financing
At the first ...