Find and compare the long-term financing using the financial statements from two companies, one of which should be the organization you are part of.

 

The question above requires the concept of long term financing in finance. Long term financing is basically any financial resource that ahs a maturity exceeding one yea and they include bank loans over one year, debentures, bonds and mortgages. Other sources fro long term financing include government debt to finance government operations, corporate bonds, unsecured debt and senior debt to the organization. Different company's financial statements show a variation in the long term financing at the end of every financial year. The comparison off the long term financing between companies requires an analysis into the following factors that determines when and why a company should take a long term finance. From the financial statements off the two companies, one can note the difference in the interest rates off each long term finance and this can have an impact on the amount of the finance and the monthly payment of the employees from each company.

The second comparison between the two companies should be involve considering the type of financing that each company is using in each financial year. This will determine the effectiveness and give an impression of the overall financial report of the company. While checking for the comparison, it's also important to check the length of the loan term as the shorter the loan term, the less money the companies will pay at the end. From the financial statements of the two companies one should also note any additional fees being charged on the loan as this may have a reflection of what each company will have to pay at the end. calculate the net profits and the net losses that could arise from the financial statement and hence compare the effectives and proper usage of the loans. Its also important to calculate the total cost each company will have to pay at the end of the loan and this will enable one to determine the best loans the company should take in future.