The short term finance
Short-term finance is required to meet the working capital requirements of business. It is required for a short period of unto one year for holding stock of raw materials and finished goods and to pay for the day-to-day expenses. There is a time gap between production and sales. Short-term finance is required dicing this gap. Short-term finance is knows as working capital or circulating capital. The production and sale cycle is generally completed in one year. Therefore, short-term funds are used again and again form year to year. The amount of short-term finance required depends on the nature of business, time gap between start of production and sale of goods and volume of business. A trading concern needs more short-term capital than a manufacturing concern. When the time gap between the stat of production and sale of goods is long, more short-terms funds are required. A large scald firm needs moor short-term funds than a small scald firm.