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Question
State how 'Long term Investment Decision' and 'Short term Investment Decision' affect the business.
Solution
- Long-term and short-term investment decisions might have differing effects on a corporation. Long-term investments can help a company grow and extend its operations, but they are also risky and could not produce returns for several years. Short-term investments can help a company manage its cash flow and satisfy short-term financial obligations, but they may not yield large returns and are susceptible to market changes.
- Finally, the type of investment decision made by a company is determined by its overall strategy, financial goals, and risk tolerance. A balanced approach that considers both short-term and long-term factors can help a corporation achieve its financial goals while efficiently managing risk.
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