Which of the following is a source of long-term funds?

Long-term funds are capital raised for a period exceeding one year, typically used to finance fixed assets, expansion projects, or other long-term strategic initiatives. Understanding the distinction between long-term and short-term financing is crucial for a company's financial health.

Debentures are the correct answer because they are debt instruments issued by companies to raise long-term capital. They represent a loan to the company, usually with a fixed interest rate and a maturity period of several years, making them a classic source of long-term funding.

• Cash credit is a short-term financing facility provided by banks, allowing a business to withdraw money up to a certain limit against collateral. It's primarily used for working capital needs, not long-term investments.
• Trade credit is credit extended by suppliers to customers for goods purchased. It's typically for a very short period (e.g., 30-90 days) and is considered a spontaneous source of short-term financing.
• Factoring involves selling accounts receivable to a third party at a discount to obtain immediate cash. This is a method for managing short-term liquidity and accelerating cash flow from existing receivables, not a source of long-term capital.