What is the financing period? Is a longer or shorter financing period most desirable?

The financing period is the amount of time from the purchase of inventory until it is sold and payment is collected, less the amount of time creditors give the company to pay for the inventory. A shorter financing period is most desireable. During the financing period, a company must be able to do without the cash either by relying on cash flows from other sources within the company or by borrowing. If they lack the cash to pay bills when they come due, they can be forced out of business.