Question

What are some factors that financial managers consider when choosing the maturity structure of their debt?

Answer 1

Some factors that financial managers consider when choosing the maturity structure of their debt are-

• The required sum.
• capital is needed for what kind of spending.
• Duration of time during which money is needed.
• Size, standing, and potential for corporate expansion.
• present gearing of the business.
• Cost of the funding source.

The link between short-term and long-term debt, where long-term debt is defined as debt with a maturity of more than one year, and short-term debt, is known as the debt maturity structure. Debts are debts with a 12-month maturity date. The length of time and frequency of principal and interest payments are referred to as the debt structure.

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