Question

“A business organization requires both long term and short term capital which can either be on the form of ownership capital and borrowed capital.” Comment upon the statement with hypothetical example.

Answer 1

Borrowed capital is the capital which the business borrows from institutions or people. On the other hand, owned capital is the capital that owners of a business (shareholders and partners, for example) provide. Long term and short term capital might come from these two types since it is the only source of money for the business to grow.