Which type of finance refers to borrowed or invested money for a period typically exceeding one year?

Long-term finance refers to borrowed or invested money with repayment or investment horizons typically exceeding one year. This type of financing is essential for businesses looking to fund significant investments such as the purchase of equipment, real estate, or expansion projects. The extended timeframe allows businesses to plan their repayments or manage returns on investments over a more extended period, which can also lead to more manageable cash flow and financial stability.

In contrast, short-term finance generally pertains to funds that must be repaid within one year or less, often used to cover immediate operational costs. Equity financing involves raising capital by selling shares of the company, which can also have varying timeframes but is distinct from the specifity of borrowing. Working capital refers to the money available for day-to-day operations, usually linked to short-term liabilities and assets, rather than long-term financial commitments. Understanding the differences between these types of finance is essential for making informed financial decisions within a business context.