Archive about 'Sources of Fund'
What are the advantages and disadvantages of using Common Stock Financing from the viewpoint of the Corporation
Tweet The advantages of using stock financing are: Common stock does not obligate the firm to make fixed payments to stockholders Carries no fixed maturity date Increases the creditworthiness of the firm thus increasing the future availability of debt at a lower cost Can often be sold more easily than debt if the firm’s prospects […]
Source Or Type Of Short Term Finance: Inventories Pledged as Collateral for Short Term Loan
Tweet Inventories though not really considered as liquid asset are also being used as collaterals to obtain short term loan from lenders. From the lender’s standpoint, in the event of borrower’s default, the lenders can still dispose off the inventories at book value ( assuming those inventories items are easily marketable with stable pricing) The […]
Source or Type Of Short term finance: Revolving Credit
Tweet Append below features of Revolving Credit, the advantages and disadvantages of using Revolving Credit: Features & Salient Points Borrowing for a short period of time say ninety days but renewable when expiry date is due; Has the feature of both short-term and medium-term loans as the borrower can keep repaying and borrowing for a […]
Source or Type of Short term finance: Trade Credits From Accounts Payable
Tweet Append below features of Trade credits or Accounts Payable, the advantages and disadvantages of using trade credits: Features & Salient Points Credit extended by the supplier of goods and/ services; Normally for a period of 30 to 90 days; Credit term given by suppliers will depend on the company’s financial position and […]
Source or Type Of Short-term Finance: Short-term loan
Tweet Append below features of Short Term Loan, the advantages and disadvantages of using Short Term Loan: Features & Salient Points Fixed amount and have a fixed period of time to repay the loan; Interest rate is fixed; Duration from few months to few years; Repayments either in installments or bullet type meaning one […]
Source or Type Of Short-term loan: Invoice Discounting
Tweet Append below features of Invoice Discounting, the advantages and disadvantages of using Invoice Discounting: Features & Salient Points Similar to factoring. The lender will advance a percentage of the trade debt The collection and management of the trade debt is done by the company and not the lending institution The borrower to repay amount […]
Source Of Short Term Finance: Bridging loans
Tweet Append below features of Bridging Loan, the advantages and disadvantages of using Bridging Loan: Features & Salient Points Normally applies to property based or project financing Loans are given for a specified period of time and coincides with the date the funds to repay. For example, in a housing project, a bridging […]
Source Of Short Term Finance: Bank Overdraft
Tweet Append below features of Bank overdraft, the advantages and disadvantages of using Bank overdraft: Features & Salient Points Simplest and most flexible type of short term finance for most business; Given a maximum limit; Interest is charged only on those utilized; Unutilized amount is charged a small % of commitment fee; This facility […]
Short Term Finance:Commercial Paper
Tweet One way of raising short term financing is the use of Commercial Paper. Commercial Paper is one of the many money market instruments for raising funds. Before we proceed to understand Commercial Paper, let’s first understand what the term money market means. Money market is: A segment of the financial market in which financial […]
The Factors To Consider When Planning Finance/Financial Planning For An Enterprise
Tweet Planning finance involves what kind of finance should be used, where to obtain and when should it be available. The following tabulate some major factors that we should consider:- The factors for consideration when planning finance or financial planning are as follows Cost– minimizing cost is a major financial objective hence the need to […]