6. Short-term financing Why use short-term financing? Cash flows from operations may not be sufficient for a firm to keep up with groweh-related financing needs, or the firm may not be able to always generate enough cash flow to maintain a surplus of cash. Firms prefer to borrow now to fulfil their capital requirements through mesns of short-term financing or long-term financing. Both methods have their advantages and disadvantages. The following statement identifies a possible characteristic of short-term financing: Consider this case: Interest rates on short-term loans are more stable than long-term loans. Identify whether the preceding statement is true or faise. This statement is true. This statement is false