Which of the following financing methods is categorized as medium-term finance?

Leasing is categorized as medium-term finance because it typically involves acquiring the use of an asset, such as equipment or vehicles, for a period ranging from two to five years. During this term, the business makes regular payments to the lessor, who retains ownership of the asset. This method allows businesses to access required assets without the substantial upfront costs associated with buying them outright. It provides flexibility and the chance to upgrade assets at the end of the lease term, making it a practical choice for financing needs that fall within the medium-term range.

In contrast, options like bank overdrafts and trade credit are usually associated with short-term financing, intended to cover immediate cash flow needs. Retained profits tend to be a long-term source of finance, as they represent accumulated earnings that a business reinvests rather than distributing to shareholders. Thus, leasing stands out as the option that aligns with medium-term financing requirements.