What are the consequences of long term Investment with short term debt financing?

Thank you to the callin the short term could lead to a liquidity crisis and the decline in growth.

Biggest threat to you will be early repayment of short term debt that might sink you in to liquidity crisis. As long term investment might not generate significant return in the rearlier years will force to take up another debt. 

However with prespective of Investor the gearing ratio will spike down if the short term debt was of significant value or that the company has no other source of debt. Which might attract few investor what so ever if you are a listed ocmpany this could be true in such case lack of liquid funds might have threats to going concerns of the  business and might require certain disclosures to be made in the Financial Statements to avoid any miss guidance to investor. Such debt should not be taken to finance long term investment unless a further plan has been made to replace liquidity short fall.

It may bring shortage of finance in between the project.

Thanks for invitation,

This what  we call "Miss matching Finance", and will cause a problem to that organization in repayment such short term debt on its due maturity date, or "Insolvency"

Depending on rate of return earned on long term investment relative to short term cost of debt, during tight margins there is high probability you may loose by paying more interest rather than earning on investment including roll forward cost of short term debt generally charged by the banks. Cost of debt is factor of credit rating of borrower and may change in subsequent period based on change in monetary policy. 

Thanks

I believe that this funding would come from a higher hand with good control for the most productive groups, then we would get a high growth ratios within our societies

1.you tight down funds through long term investment.

2.short term debts will be accumulating

• Management must match long-term financing or short-term financing mix to the assets being financed in terms of both timing and cash flow.
• Long-term financing includes equity issued, Corporate bond, Capital notes and so on.
• Short-term financing includes Commercial papers, Promissory notes, Asset-based loans, Repurchase agreements, letters of credit and so on.