Untitled-29

(^346) Financial Management Chapter-13 Working Capital Financing Accruals, trade credit, commercial Banks advances, public depos ...

Working Capital Financing^347 Approximate Cost-of-Credit Formula The procedure used in estimating the cost of short-term credit ...

(^348) Financial Management The effect of compounding is to raise the effective cost of short-term credit. Since the differences ...

Working Capital Financing^349 and an entry in his accounts receivable ledger. It is indicative of the extent to which a ìcredit ...

(^350) Financial Management (2) the period within which payment must be made if the cash discount is to be allowed; and (3) the ...

Working Capital Financing^351 Cash discount terms In addition to extending credit on net terms, suppliers may offer a cash disco ...

(^352) Financial Management In reality, in many lines of business, smaller companies are ìcarriedî by their suppliers. Trade cre ...

Working Capital Financing^353 For example, the Road Company purchases it raw materials on terms of 2/10 net 30. It thus has the ...

(^354) Financial Management business companies must exercise continuing care to avoid falling into the habit of using trade cred ...

Working Capital Financing^355 A business firm may have diverse credit needs and may require either (1) a revolving credit arrang ...

(^356) Financial Management Transaction Basis When a firm borrows only occasionally, for specific purposes that may differ from ...

Working Capital Financing^357 cash balance equal to the 10 per cent compensating balance. To accommodate the cost of the compens ...

(^358) Financial Management Compensating Balances Banks require client firms with a line of credit or a revolving credit arrange ...

Working Capital Financing^359 Risk Classes. Bank typically classify credit applicants into a series of risk classes. The balance ...

(^360) Financial Management Concept of Credit Quality The credit quality of a prospective business borrower is revealed to the l ...

Working Capital Financing^361 Inter Corporate Deposits One of the most utilised money market instruments, ICDs are the hallmark ...

(^362) Financial Management A short-term loan is one having a maturity of less than one year. Loans maturing within 1 to 10 year ...

Working Capital Financing^363 machinery, and so forth, the loans can be readily secured by the new equipment being purchased. Oc ...

(^364) Financial Management periodic sheets, income statements, cash budgets and sources, and uses of funds statements. This all ...

Working Capital Financing^365 P = Rs 800,000 / 6,4177 = Rs 124,655.25. After Central has made 10 annual payments of Rs 124,655,2 ...