RELATIONSHIP BETWEEN CORPORATE DEVELOPMENT AND SHORT-TERM CREDIT DYNAMICS

Iuliana Militaru
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Iuliana Militaru: Romanian-American University, Bucharest, Romania

Journal of Financial and Monetary Economics, 2016, vol. 3, issue 1, 156-161

Abstract: It is an established fact all firms need, for achieving long-term development, long-term financing sources – most important being, among them, retentions and bank loans; but, long-term development is definitely not possible if the firms‘ experiences in meeting its financial leverage, i.e. in maintaining and bolstering its liquidity. This is no minor benchmark: liquidity of a firm is nothing less than its ability to meet its obligations without selling/mortgaging its fixed assets – indispensable to long-term development. Putting it in another light, long-term finance sources cannot replace short-term ones, i.e. short-term credit, especially if firm´s economic cycle is adaptable/adapted to – or even designed for – using as a rule short-term financing. Furthermore, a basic route to long-term development, a sustained increase in sales volume, needs a good use of short-term credit.

Keywords: financing sources; trade credit; debt (search for similar items in EconPapers)
JEL-codes: D24 G31 (search for similar items in EconPapers)
Date: 2016
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