What is an example of a long-term financing source?

Equity is considered a long-term financing source as it represents the funds raised by a company through the sale of shares of stock. When investors purchase equity in a company, they are providing capital that the company can utilize for an extended period, often for growth initiatives, expansion, or long-term projects. Unlike debts that typically need to be repaid over a set period, equity financing does not have a fixed repayment schedule, allowing the company to use that capital for long-term purposes without the pressure of immediate repayment.

In contrast, accounts payable and commercial papers are generally regarded as short-term liabilities, requiring payment within a relatively brief period. Bank loans can be classified as long-term or short-term depending on their terms, but without specification, they are often associated with shorter time frames. Thus, equity stands out as the clear representative of long-term financing options.