Question

Fixed assets should never be financed through short term sources.Do you agree​

Answer 1

A company invests in fixed assets with the intention of using it for longer period of time, which is generally over a year.

These assets have long term implication on the business in terms of generating growth prospects and contribution to profitability. For the same reason, they are financed through cost-effective long term sources such as long term loans, preference shares, retained earnings.