It is required for meeting the short-term needs of working capital. Its period is up to 12 months and it can be raised form the following sources : (a) public deposits; (b) trade credits; (c) commercial banks, customer advance.

Short-term funds are require for purchase of raw materials, payment of wages and salaries and meeting other day-to-day expenses. They are raised through shor-term loans or trade credits. As soon as goods are sold and funds are recovered, the amounts may be used for current operations or for paying back the loans. Generally, production processes are completed within a year and goods are ready for sale. Hence, short-term fund can be used overhand over again form year to year.

For more help in Short-Term Finance click the button below to submit your homework assignment