Give any two purposes for which medium term finance is required
Answers
Two purposes for which medium term finance is required is as follows
1. First I can say that when long-term capital is not available for the time being.
This will automatically lead to sourcing of the medium term finance to enable you meet your objectives that you had set.
2. Again I can say that when deferred revenue expenditures for instance advertisements are made which are facing being cancelled over a period of 3 to 5 years.
Consider the answers above.
The two purposes of a medium term finance may include -
(1) If someone or a business wants to buy large fixed assets, and
(2) when a business needs fund for expansion.
A medium term finance is usually a source of fund that provides money for 3 to 5 years.
This is usually taken when long term financing options are not available or when deferred revenue expenditures may have to be made.
These can be in the form of debentures/bonds, preferential shares, mid-term loans, etc.