Question

please explain this abstract thinking for me in relation to finance or financial management... and the topic it relate to.

'' BORROWING SEED FROM NEIGHBOR WITH UNDERSTANDING THAT THE AMOUNT OF SEED PLUS LITTLE EXTRA TO BE RETURNED AT END OF THE GROWING SEASOn

Answer 1

This is more like borrowing short term loans from a related party, We say this short term because once you borrow the seeds or take loans and invest it into your business. This has to be returned at end of growing season along with a little extra amount, so as we know that once you borrow seeds growing season has to be within a year and within a year you will be able to reap off the benefits from those seeds and return seeds with something extra to neighbor. In case of finance industry also you borrow some amount for short term and you have to return it back in year or two along with some interest on it.

In context of finance we call it short term loans or in terms of financial management we call it working capital loans required at initial stage of any project and once cash flows begin from first or second year you utilize them to procure working capital for upcoming years and payback initially borrowed loans with interest due on it. Also if you borrow this from someone of your knowing or any related party we can call them as neighbor.