The document provides background information on BP Plastics Holding Bhd, including its mission, core businesses, board of directors, and financial analysis comparing its performance ratios in 2012 and 2013. Key points covered include the company's registration details, subsidiaries, financial year end, and businesses in cast film and blown film production. Financial ratios analyzed include liquidity, activity, leverage, profitability, and returns. The summary compares the company's performance in these ratios between 2012 and 2013.
- The document discusses sources of short-term finance for businesses. It identifies key sources as trade credit, bank loans/overdrafts, customers' advances, installment plans, and cooperative bank loans.
- Trade credit involves suppliers providing goods on 30-90 day payment terms. Bank financing includes loans, cash credits, overdrafts and bill discounting. Customers' advances and installment plans provide pre-payments from customers. Cooperative banks also offer short-term business loans.
- Short-term financing has benefits like low cost, flexibility and meeting long-term needs but has drawbacks like fixed interest costs, placing charges on assets, and difficulty raising funds during downturns.
Short-term financing refers to loans of up to 12 months that are used to finance short-term assets and cash flow needs. Common types of short-term financing include overdrafts, trade credit, loans, and credit cards. Firms need short-term financing to finance inventory or meet growth needs when cash flow is insufficient. Spontaneous financing like accounts payable and accrued expenses also provide financing that fluctuates with sales volume without requiring additional credit. Trade credit is a major type of spontaneous financing where suppliers provide credit for 28 days.
This slide is about Short Term Financing. I prepared it for my class presentation at the course FIN101. All the information in this slide collected from various kind of sources.
This document discusses various sources and methods of short-term financing for companies. It describes spontaneous financing sources like trade credits and accruals that arise from normal business operations without additional negotiation. Trade credits can come from open account arrangements, notes payables, or trade acceptances between suppliers and buyers. The document also examines negotiated financing options like commercial paper, bank loans, asset-backed loans, and factoring of accounts receivable. It analyzes factors for companies to consider like costs, availability, timing, flexibility and encumbrance of assets when determining the best mix of short-term financing sources.
Short term sources of finance include commercial papers and factoring. Commercial papers are money market instruments issued by companies with good credit ratings for 3 months to 1 year. Factoring involves selling a company's receivables to a factoring agent in exchange for immediate financing, with the factor taking on the risk of debt.
Long term sources include shares, debentures, term loans, venture capital and lease financing. Shares are equity while debentures are debt securities. Term loans are obtained from banks for capital expenditures. Venture capital provides early stage financing for new companies in exchange for equity. Lease financing involves leasing assets from a lessor.
Financial restructuring methods include debt-equity swaps,
The document discusses various types of term loans including long-term loans, intermediate term loans, and short-term loans. Long-term loans mature between 1-7 years and are used for major business expenses. Intermediate term loans mature in less than 5 years and are used to purchase equipment and vehicles. Short-term loans mature within 1 year and provide quick access to funds but have higher interest rates.
There are three main sources of finance: 1) Security financing or external financing through ownership securities like equity shares and preference shares, and creditorship securities like debentures and bonds. 2) Internal financing through retained earnings and depreciation. 3) Loan financing, which includes short term loans from traders, banks, and commercial paper, as well as medium and long term loans from specialized financial institutions.
The document provides background information on BP Plastics Holding Bhd, including its mission, core businesses, board of directors, and financial analysis comparing its performance ratios in 2012 and 2013. Key points covered include the company's registration details, subsidiaries, financial year end, and businesses in cast film and blown film production. Financial ratios analyzed include liquidity, activity, leverage, profitability, and returns. The summary compares the company's performance in these ratios between 2012 and 2013.
- The document discusses sources of short-term finance for businesses. It identifies key sources as trade credit, bank loans/overdrafts, customers' advances, installment plans, and cooperative bank loans.
- Trade credit involves suppliers providing goods on 30-90 day payment terms. Bank financing includes loans, cash credits, overdrafts and bill discounting. Customers' advances and installment plans provide pre-payments from customers. Cooperative banks also offer short-term business loans.
- Short-term financing has benefits like low cost, flexibility and meeting long-term needs but has drawbacks like fixed interest costs, placing charges on assets, and difficulty raising funds during downturns.
Short-term financing refers to loans of up to 12 months that are used to finance short-term assets and cash flow needs. Common types of short-term financing include overdrafts, trade credit, loans, and credit cards. Firms need short-term financing to finance inventory or meet growth needs when cash flow is insufficient. Spontaneous financing like accounts payable and accrued expenses also provide financing that fluctuates with sales volume without requiring additional credit. Trade credit is a major type of spontaneous financing where suppliers provide credit for 28 days.
This slide is about Short Term Financing. I prepared it for my class presentation at the course FIN101. All the information in this slide collected from various kind of sources.
This document discusses various sources and methods of short-term financing for companies. It describes spontaneous financing sources like trade credits and accruals that arise from normal business operations without additional negotiation. Trade credits can come from open account arrangements, notes payables, or trade acceptances between suppliers and buyers. The document also examines negotiated financing options like commercial paper, bank loans, asset-backed loans, and factoring of accounts receivable. It analyzes factors for companies to consider like costs, availability, timing, flexibility and encumbrance of assets when determining the best mix of short-term financing sources.
Short term sources of finance include commercial papers and factoring. Commercial papers are money market instruments issued by companies with good credit ratings for 3 months to 1 year. Factoring involves selling a company's receivables to a factoring agent in exchange for immediate financing, with the factor taking on the risk of debt.
Long term sources include shares, debentures, term loans, venture capital and lease financing. Shares are equity while debentures are debt securities. Term loans are obtained from banks for capital expenditures. Venture capital provides early stage financing for new companies in exchange for equity. Lease financing involves leasing assets from a lessor.
Financial restructuring methods include debt-equity swaps,
The document discusses various types of term loans including long-term loans, intermediate term loans, and short-term loans. Long-term loans mature between 1-7 years and are used for major business expenses. Intermediate term loans mature in less than 5 years and are used to purchase equipment and vehicles. Short-term loans mature within 1 year and provide quick access to funds but have higher interest rates.
There are three main sources of finance: 1) Security financing or external financing through ownership securities like equity shares and preference shares, and creditorship securities like debentures and bonds. 2) Internal financing through retained earnings and depreciation. 3) Loan financing, which includes short term loans from traders, banks, and commercial paper, as well as medium and long term loans from specialized financial institutions.
Every business, big or small, deals with outgoing payments. Whether it’s to suppliers for inventory, to employees for salaries, or to vendors for services rendered, keeping track of these expenses is crucial. This is where payment vouchers come in – the unsung heroes of the accounting world.
Economic Risk Factor Update: June 2024 [SlideShare]Commonwealth
May’s reports showed signs of continued economic growth, said Sam Millette, director, fixed income, in his latest Economic Risk Factor Update.
For more market updates, subscribe to The Independent Market Observer at https://blog.commonwealth.com/independent-market-observer.
Explore the world of investments with an in-depth comparison of the stock market and real estate. Understand their fundamentals, risks, returns, and diversification strategies to make informed financial decisions that align with your goals.
Budgeting as a Control Tool in Government Accounting in Nigeria
Being a Paper Presented at the Nigerian Maritime Administration and Safety Agency (NIMASA) Budget Office Staff at Sojourner Hotel, GRA, Ikeja Lagos on Saturday 8th June, 2024.
Discovering Delhi - India's Cultural Capital.pptxcosmo-soil
Delhi, the heartbeat of India, offers a rich blend of history, culture, and modernity. From iconic landmarks like the Red Fort to bustling commercial hubs and vibrant culinary scenes, Delhi's real estate landscape is dynamic and diverse. Discover the essence of India's capital, where tradition meets innovation.
Monthly Market Risk Update: June 2024 [SlideShare]Commonwealth
Markets rallied in May, with all three major U.S. equity indices up for the month, said Sam Millette, director of fixed income, in his latest Market Risk Update.
For more market updates, subscribe to The Independent Market Observer at https://blog.commonwealth.com/independent-market-observer.
University of North Carolina at Charlotte degree offer diploma Transcripttscdzuip
办理美国UNCC毕业证书制作北卡大学夏洛特分校假文凭定制Q微168899991做UNCC留信网教留服认证海牙认证改UNCC成绩单GPA做UNCC假学位证假文凭高仿毕业证GRE代考如何申请北卡罗莱纳大学夏洛特分校University of North Carolina at Charlotte degree offer diploma Transcript
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
2024 State of Marketing Report – by HubspotMarius Sescu
https://www.hubspot.com/state-of-marketing
· Scaling relationships and proving ROI
· Social media is the place for search, sales, and service
· Authentic influencer partnerships fuel brand growth
· The strongest connections happen via call, click, chat, and camera.
· Time saved with AI leads to more creative work
· Seeking: A single source of truth
· TLDR; Get on social, try AI, and align your systems.
· More human marketing, powered by robots
ChatGPT is a revolutionary addition to the world since its introduction in 2022. A big shift in the sector of information gathering and processing happened because of this chatbot. What is the story of ChatGPT? How is the bot responding to prompts and generating contents? Swipe through these slides prepared by Expeed Software, a web development company regarding the development and technical intricacies of ChatGPT!
Every business, big or small, deals with outgoing payments. Whether it’s to suppliers for inventory, to employees for salaries, or to vendors for services rendered, keeping track of these expenses is crucial. This is where payment vouchers come in – the unsung heroes of the accounting world.
Economic Risk Factor Update: June 2024 [SlideShare]Commonwealth
May’s reports showed signs of continued economic growth, said Sam Millette, director, fixed income, in his latest Economic Risk Factor Update.
For more market updates, subscribe to The Independent Market Observer at https://blog.commonwealth.com/independent-market-observer.
Explore the world of investments with an in-depth comparison of the stock market and real estate. Understand their fundamentals, risks, returns, and diversification strategies to make informed financial decisions that align with your goals.
Budgeting as a Control Tool in Government Accounting in Nigeria
Being a Paper Presented at the Nigerian Maritime Administration and Safety Agency (NIMASA) Budget Office Staff at Sojourner Hotel, GRA, Ikeja Lagos on Saturday 8th June, 2024.
Discovering Delhi - India's Cultural Capital.pptxcosmo-soil
Delhi, the heartbeat of India, offers a rich blend of history, culture, and modernity. From iconic landmarks like the Red Fort to bustling commercial hubs and vibrant culinary scenes, Delhi's real estate landscape is dynamic and diverse. Discover the essence of India's capital, where tradition meets innovation.
Monthly Market Risk Update: June 2024 [SlideShare]Commonwealth
Markets rallied in May, with all three major U.S. equity indices up for the month, said Sam Millette, director of fixed income, in his latest Market Risk Update.
For more market updates, subscribe to The Independent Market Observer at https://blog.commonwealth.com/independent-market-observer.
University of North Carolina at Charlotte degree offer diploma Transcripttscdzuip
办理美国UNCC毕业证书制作北卡大学夏洛特分校假文凭定制Q微168899991做UNCC留信网教留服认证海牙认证改UNCC成绩单GPA做UNCC假学位证假文凭高仿毕业证GRE代考如何申请北卡罗莱纳大学夏洛特分校University of North Carolina at Charlotte degree offer diploma Transcript
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
2024 State of Marketing Report – by HubspotMarius Sescu
https://www.hubspot.com/state-of-marketing
· Scaling relationships and proving ROI
· Social media is the place for search, sales, and service
· Authentic influencer partnerships fuel brand growth
· The strongest connections happen via call, click, chat, and camera.
· Time saved with AI leads to more creative work
· Seeking: A single source of truth
· TLDR; Get on social, try AI, and align your systems.
· More human marketing, powered by robots
ChatGPT is a revolutionary addition to the world since its introduction in 2022. A big shift in the sector of information gathering and processing happened because of this chatbot. What is the story of ChatGPT? How is the bot responding to prompts and generating contents? Swipe through these slides prepared by Expeed Software, a web development company regarding the development and technical intricacies of ChatGPT!
Product Design Trends in 2024 | Teenage EngineeringsPixeldarts
The realm of product design is a constantly changing environment where technology and style intersect. Every year introduces fresh challenges and exciting trends that mold the future of this captivating art form. In this piece, we delve into the significant trends set to influence the look and functionality of product design in the year 2024.
How Race, Age and Gender Shape Attitudes Towards Mental HealthThinkNow
Mental health has been in the news quite a bit lately. Dozens of U.S. states are currently suing Meta for contributing to the youth mental health crisis by inserting addictive features into their products, while the U.S. Surgeon General is touring the nation to bring awareness to the growing epidemic of loneliness and isolation. The country has endured periods of low national morale, such as in the 1970s when high inflation and the energy crisis worsened public sentiment following the Vietnam War. The current mood, however, feels different. Gallup recently reported that national mental health is at an all-time low, with few bright spots to lift spirits.
To better understand how Americans are feeling and their attitudes towards mental health in general, ThinkNow conducted a nationally representative quantitative survey of 1,500 respondents and found some interesting differences among ethnic, age and gender groups.
Technology
For example, 52% agree that technology and social media have a negative impact on mental health, but when broken out by race, 61% of Whites felt technology had a negative effect, and only 48% of Hispanics thought it did.
While technology has helped us keep in touch with friends and family in faraway places, it appears to have degraded our ability to connect in person. Staying connected online is a double-edged sword since the same news feed that brings us pictures of the grandkids and fluffy kittens also feeds us news about the wars in Israel and Ukraine, the dysfunction in Washington, the latest mass shooting and the climate crisis.
Hispanics may have a built-in defense against the isolation technology breeds, owing to their large, multigenerational households, strong social support systems, and tendency to use social media to stay connected with relatives abroad.
Age and Gender
When asked how individuals rate their mental health, men rate it higher than women by 11 percentage points, and Baby Boomers rank it highest at 83%, saying it’s good or excellent vs. 57% of Gen Z saying the same.
Gen Z spends the most amount of time on social media, so the notion that social media negatively affects mental health appears to be correlated. Unfortunately, Gen Z is also the generation that’s least comfortable discussing mental health concerns with healthcare professionals. Only 40% of them state they’re comfortable discussing their issues with a professional compared to 60% of Millennials and 65% of Boomers.
Race Affects Attitudes
As seen in previous research conducted by ThinkNow, Asian Americans lag other groups when it comes to awareness of mental health issues. Twenty-four percent of Asian Americans believe that having a mental health issue is a sign of weakness compared to the 16% average for all groups. Asians are also considerably less likely to be aware of mental health services in their communities (42% vs. 55%) and most likely to seek out information on social media (51% vs. 35%).
AI Trends in Creative Operations 2024 by Artwork Flow.pdfmarketingartwork
Creative operations teams expect increased AI use in 2024. Currently, over half of tasks are not AI-enabled, but this is expected to decrease in the coming year. ChatGPT is the most popular AI tool currently. Business leaders are more actively exploring AI benefits than individual contributors. Most respondents do not believe AI will impact workforce size in 2024. However, some inhibitions still exist around AI accuracy and lack of understanding. Creatives primarily want to use AI to save time on mundane tasks and boost productivity.
Organizational culture includes values, norms, systems, symbols, language, assumptions, beliefs, and habits that influence employee behaviors and how people interpret those behaviors. It is important because culture can help or hinder a company's success. Some key aspects of Netflix's culture that help it achieve results include hiring smartly so every position has stars, focusing on attitude over just aptitude, and having a strict policy against peacocks, whiners, and jerks.
PEPSICO Presentation to CAGNY Conference Feb 2024Neil Kimberley
PepsiCo provided a safe harbor statement noting that any forward-looking statements are based on currently available information and are subject to risks and uncertainties. It also provided information on non-GAAP measures and directing readers to its website for disclosure and reconciliation. The document then discussed PepsiCo's business overview, including that it is a global beverage and convenient food company with iconic brands, $91 billion in net revenue in 2023, and nearly $14 billion in core operating profit. It operates through a divisional structure with a focus on local consumers.
Content Methodology: A Best Practices Report (Webinar)contently
This document provides an overview of content methodology best practices. It defines content methodology as establishing objectives, KPIs, and a culture of continuous learning and iteration. An effective methodology focuses on connecting with audiences, creating optimal content, and optimizing processes. It also discusses why a methodology is needed due to the competitive landscape, proliferation of channels, and opportunities for improvement. Components of an effective methodology include defining objectives and KPIs, audience analysis, identifying opportunities, and evaluating resources. The document concludes with recommendations around creating a content plan, testing and optimizing content over 90 days.
How to Prepare For a Successful Job Search for 2024Albert Qian
The document provides guidance on preparing a job search for 2024. It discusses the state of the job market, focusing on growth in AI and healthcare but also continued layoffs. It recommends figuring out what you want to do by researching interests and skills, then conducting informational interviews. The job search should involve building a personal brand on LinkedIn, actively applying to jobs, tailoring resumes and interviews, maintaining job hunting as a habit, and continuing self-improvement. Once hired, the document advises setting new goals and keeping skills and networking active in case of future opportunities.
A report by thenetworkone and Kurio.
The contributing experts and agencies are (in an alphabetical order): Sylwia Rytel, Social Media Supervisor, 180heartbeats + JUNG v MATT (PL), Sharlene Jenner, Vice President - Director of Engagement Strategy, Abelson Taylor (USA), Alex Casanovas, Digital Director, Atrevia (ES), Dora Beilin, Senior Social Strategist, Barrett Hoffher (USA), Min Seo, Campaign Director, Brand New Agency (KR), Deshé M. Gully, Associate Strategist, Day One Agency (USA), Francesca Trevisan, Strategist, Different (IT), Trevor Crossman, CX and Digital Transformation Director; Olivia Hussey, Strategic Planner; Simi Srinarula, Social Media Manager, The Hallway (AUS), James Hebbert, Managing Director, Hylink (CN / UK), Mundy Álvarez, Planning Director; Pedro Rojas, Social Media Manager; Pancho González, CCO, Inbrax (CH), Oana Oprea, Head of Digital Planning, Jam Session Agency (RO), Amy Bottrill, Social Account Director, Launch (UK), Gaby Arriaga, Founder, Leonardo1452 (MX), Shantesh S Row, Creative Director, Liwa (UAE), Rajesh Mehta, Chief Strategy Officer; Dhruv Gaur, Digital Planning Lead; Leonie Mergulhao, Account Supervisor - Social Media & PR, Medulla (IN), Aurelija Plioplytė, Head of Digital & Social, Not Perfect (LI), Daiana Khaidargaliyeva, Account Manager, Osaka Labs (UK / USA), Stefanie Söhnchen, Vice President Digital, PIABO Communications (DE), Elisabeth Winiartati, Managing Consultant, Head of Global Integrated Communications; Lydia Aprina, Account Manager, Integrated Marketing and Communications; Nita Prabowo, Account Manager, Integrated Marketing and Communications; Okhi, Web Developer, PNTR Group (ID), Kei Obusan, Insights Director; Daffi Ranandi, Insights Manager, Radarr (SG), Gautam Reghunath, Co-founder & CEO, Talented (IN), Donagh Humphreys, Head of Social and Digital Innovation, THINKHOUSE (IRE), Sarah Yim, Strategy Director, Zulu Alpha Kilo (CA).
Trends In Paid Search: Navigating The Digital Landscape In 2024Search Engine Journal
The search marketing landscape is evolving rapidly with new technologies, and professionals, like you, rely on innovative paid search strategies to meet changing demands.
It’s important that you’re ready to implement new strategies in 2024.
Check this out and learn the top trends in paid search advertising that are expected to gain traction, so you can drive higher ROI more efficiently in 2024.
You’ll learn:
- The latest trends in AI and automation, and what this means for an evolving paid search ecosystem.
- New developments in privacy and data regulation.
- Emerging ad formats that are expected to make an impact next year.
Watch Sreekant Lanka from iQuanti and Irina Klein from OneMain Financial as they dive into the future of paid search and explore the trends, strategies, and technologies that will shape the search marketing landscape.
If you’re looking to assess your paid search strategy and design an industry-aligned plan for 2024, then this webinar is for you.
5 Public speaking tips from TED - Visualized summarySpeakerHub
From their humble beginnings in 1984, TED has grown into the world’s most powerful amplifier for speakers and thought-leaders to share their ideas. They have over 2,400 filmed talks (not including the 30,000+ TEDx videos) freely available online, and have hosted over 17,500 events around the world.
With over one billion views in a year, it’s no wonder that so many speakers are looking to TED for ideas on how to share their message more effectively.
The article “5 Public-Speaking Tips TED Gives Its Speakers”, by Carmine Gallo for Forbes, gives speakers five practical ways to connect with their audience, and effectively share their ideas on stage.
Whether you are gearing up to get on a TED stage yourself, or just want to master the skills that so many of their speakers possess, these tips and quotes from Chris Anderson, the TED Talks Curator, will encourage you to make the most impactful impression on your audience.
See the full article and more summaries like this on SpeakerHub here: https://speakerhub.com/blog/5-presentation-tips-ted-gives-its-speakers
See the original article on Forbes here:
http://www.forbes.com/forbes/welcome/?toURL=http://www.forbes.com/sites/carminegallo/2016/05/06/5-public-speaking-tips-ted-gives-its-speakers/&refURL=&referrer=#5c07a8221d9b
ChatGPT and the Future of Work - Clark Boyd Clark Boyd
Everyone is in agreement that ChatGPT (and other generative AI tools) will shape the future of work. Yet there is little consensus on exactly how, when, and to what extent this technology will change our world.
Businesses that extract maximum value from ChatGPT will use it as a collaborative tool for everything from brainstorming to technical maintenance.
For individuals, now is the time to pinpoint the skills the future professional will need to thrive in the AI age.
Check out this presentation to understand what ChatGPT is, how it will shape the future of work, and how you can prepare to take advantage.
The document provides career advice for getting into the tech field, including:
- Doing projects and internships in college to build a portfolio.
- Learning about different roles and technologies through industry research.
- Contributing to open source projects to build experience and network.
- Developing a personal brand through a website and social media presence.
- Networking through events, communities, and finding a mentor.
- Practicing interviews through mock interviews and whiteboarding coding questions.
Google's Just Not That Into You: Understanding Core Updates & Search IntentLily Ray
1. Core updates from Google periodically change how its algorithms assess and rank websites and pages. This can impact rankings through shifts in user intent, site quality issues being caught up to, world events influencing queries, and overhauls to search like the E-A-T framework.
2. There are many possible user intents beyond just transactional, navigational and informational. Identifying intent shifts is important during core updates. Sites may need to optimize for new intents through different content types and sections.
3. Responding effectively to core updates requires analyzing "before and after" data to understand changes, identifying new intents or page types, and ensuring content matches appropriate intents across video, images, knowledge graphs and more.
A brief introduction to DataScience with explaining of the concepts, algorithms, machine learning, supervised and unsupervised learning, clustering, statistics, data preprocessing, real-world applications etc.
It's part of a Data Science Corner Campaign where I will be discussing the fundamentals of DataScience, AIML, Statistics etc.
Time Management & Productivity - Best PracticesVit Horky
Here's my presentation on by proven best practices how to manage your work time effectively and how to improve your productivity. It includes practical tips and how to use tools such as Slack, Google Apps, Hubspot, Google Calendar, Gmail and others.
The six step guide to practical project managementMindGenius
The six step guide to practical project management
If you think managing projects is too difficult, think again.
We’ve stripped back project management processes to the
basics – to make it quicker and easier, without sacrificing
the vital ingredients for success.
“If you’re looking for some real-world guidance, then The Six Step Guide to Practical Project Management will help.”
Dr Andrew Makar, Tactical Project Management
Beginners Guide to TikTok for Search - Rachel Pearson - We are Tilt __ Bright...
Short term financing notes
1. Short Term Financing
MEANING AND NATURE OF SHORT-TERM FINANCING
Short Term financing is that from of financing which embraces borrowing or lending of funds for a
short period of time. It refers to the finance obtained on short term basis, usually one year or less in
duration. Short term finance is secured for financing the current assets, for example, inventories. Short
term finance is also known as working capital which is the excess of current assets over current
liabilities. Current liabilities become due within one year and indicate the amount of short-term credit
being utilized by the business.
Practically all enterprises use the short-term credit as sources of finance. We find in the balance sheets
of almost all the companies some kinds of current liabilities which are the indicator of the uses of
short term finance in business. It has been found in the developed countries especially in USA that
even the largest business establishment makes use of short term finance.
The size of business has an important bearing on the use of short term finance. There is variation in
the use of short term finance between the large and small sized business establishments. In practically
all types of business, there is lesser use of short term credit among larger concerns. The small
concerns make more use of short term financing on account of lower average credit standing and
impermanent nature of business.
SOURCES OF SHORT TERM FINANCING
1. Trade Creditors: Trade creditors are probably the most important single source of short term
credit. Trade creditors are those business establishments which sell good to others on credit.
That is, they do not require payment on the spot; rather they are to be paid after some days
from the date of sale.
2. Customers Advances: Customers often finance the seller through advance payment for the
goods. The prices of the goods to be purchased are paid in advance, i.e. before the receipt of
the goods. This practice is prevalent where the seller does not wish to sell goods without
prepayment and the buyer also can not purchase goods form other sources. The seller might
require advance it the quantity of goods ordered is so large that he cannot afford to tie up
more fund in raw materials or in good-in-process. Special type machine manufactures often
demand advance payment in order to protect them from the loss caused by cancellation of
contract at a time when the machine has been built up or is in work in process.
3. Commercial Banks: The commercial banks of a country generally supply funds to the
business concerns on a short-term basis, either with security or without security if the
customer is financially established. The banks, collecting scattered savings of the people,
invest a portion of the deposits in the business for a short period of time.
4. Finance Companies: Finance companies usually lend money to business. They are
specialized financial institutions and their primary function is to advance funds to the business
Rejaul Islam * Financing *
Page | 1
2. Short Term Financing
5. Commercial Paper House: They are specialized financial agencies and they are created to
purchase promissory notes and to sell them, in turn, to other investors who desire to have
some shot of short-term liquid assets. The firm having high credit standing can use this source
for obtaining short-term funds.
6. Personal Loan Companies: These companies make small loans to individual generally for
consumption purposes. The small business undertakings can procure fund form such
companies
7. Governmental Institutions: There are some governmental and semi-governmental
corporations which are authorized to advance short term funds to business concerns. Their
importance is of course not so much less than other sources.
8. Factors or Brokers: In one basic respect, factoring is different from other forms of financing.
In other forms funds are granted to one individual largely on the basis of his property.
Factoring is based on a different philosophy. In considering a company’s request for funds we
are more interested in the men behind the company their ability, their hopes and aspirations
for the future.
9. Miscellaneous Sources: There are many more sources from which can secure funds for short
period. They are—friend and relatives, public deposits, loan from officer and the company
directors and foreign exchange banks
ADVANTAGES OF SHORT-TERM FINANCING
1. Easier to Obtain: Short –term credit can be more easily obtained than long term credit. A
firm which poor credit standing may be unable to obtain long term funds but it can procure, at
least some trade credit from sellers who are anxious to increase their sales. The short-term
creditors, by granting loans, assume less risk than long term creditors because there is less
chance of substantial change in the financial soundness of the creditor within a few week’s or
month’s time.
2. Lower cost: Short term credit may be obtained with lower cost than the long term finance
because of priority of creditors in general. Because of the prior position given creditors in the
matter of claim to income and to assets in dissolution they generally will accept a relatively
low interest.
3. Flexibility: Due to seasonal nature of business many firms have a temporary demand for
short-term funds to carry heavier inventories. Most enterprises are in constant need of short
term funds. Short-term financing is flexible in the sense that the firm is able to secure funds as
they are needed and repay then as soon as the need vanishes. Funds may be needed to meet
the daily, weekly or monthly requirements. Such funds can be advantageously supplied by
short term credit. It long term credit is secured to finance the daily or weekly or seasonal
Rejaul Islam * Financing *
Page | 2
3. Short Term Financing
variations, it would become inflexible because long term funds cannot be repaid as soon as
the need for funds vanishes.
4. No Sharing of control: Obtaining funds form short term creditors prevents the inclusion of
more owners through the procurement of owner’s funds. This results in maintaining the
position of control by the existing owners. Because the creditors have no voice in the
operations of the business.
5. Availability: In many cases, particularly for small enterprises short term credit is the only
source available. It may not be possible for a small firm to obtain long term funds because of
poor credit standing. Long-term credit is not generally granted without adequate margin of
protection which the small firms may not be able to provide with. The small business has then
recourse to short term funds.
6. Tax Savings: The cost of short term funds are deductible for income tax purposes while the
dividend paid to the owners is not deductible. Thus a substantial tax-savings may result form
the use of short-term funds.
7. Convenience: Short Term credit can be more conveniently secured than the other types of
funds. It is more convenient to pay labour weekly or employees monthly than every day
8. Extension of credit: Many enterprises purchase equipments, supplies and good by ordering
from a supplier with the intent of paying after delivery has been made. If subsequently the
bills are met promptly, the firm acquires a good credit standing. Then , if any emergency
arises for the purchase of any goods the firm
DISADVANTAGES OF SHORT-TERM FINANCING
1. Frequent Maturity: Short-Term credit is disadvantageous in the sense that it matures
frequently. The principal must be repaid when due, otherwise the creditors may close the
business. The use of such credit is also a risk to the owners’ investment from the inability to
meet the creditor’s claims when due. There may be danger of either meeting the principal
payment at maturity of the loan or meeting the principal payment at maturity of the loan or
meeting any periodic interest payment or both. The sorter the credits the greater the potential
risk to the owners because of the problem of prompter repayment.
2. High Cost: The rate of interest paid on sort-term is usually higher than that on long-term
credit is usually higher than that on long-term credit. The rate of interest usually depends on
the risk involved, size of loan, collateral protection, etc. The lenders may demand a high
interest if the credit involves large amount and the potential credit risk is also high or the
debtor may not give suitable security. A high interest may also be demanded when the firm
can not procure funds form other sources on suitable terms and conditions.
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4. Short Term Financing
PURPOSE/GOALS OF SHORT-TERM FINANCING
Trade credit is a kind of business credit which is extended by the seller of goods to the buyer of the
same at all levels of production and distribution process down to the retailer. Before the goods and
services have reached the ultimate users or consumers, they pass through many hands starting from
the producers down to the retailer. Trade credit is used by various agencies operating in the trade
channel between the producer and the retailer. For example, the producer may extend credit to the
wholesaler, who may also facilitate the retailer’s trade by extending credit to him. Such credits
extended by the wholesaler to the retailer or producer to the wholesaler are known as trade credit.
Trade credit has been defined as the short-term credit by a supplier to a buyer in connection with
purchase of goods for ultimate resale. This definition makes it clear that trade credit is a different type
of credit than the consumer credit and installment sale credit. Trade credit is a credit extended for the
purchase of goods with the ultimate purpose of resale. The credit accepted for the purchase of goods
which are consumed by the purchaser is not trade credit—it becomes consumer credit. So a credit, in
order to be designated as trade credit, must be extended in connection with the purchase of goods
which must be resold.
ADVANTAGES /REASONS FOR USE TRADE CREDIT
One of the most important reasons for the use of trade credit is its cheapness. Trade credit, in most
cases, is cheaper than other sources of credit, obtaining funds form finance companies or banks gives
rise to many complications. The lender may impose restrictions on the action of the management. The
rate of interest to be paid on the funds is also determined in advance. In trade credit no specific rate of
interest is to be paid.
Trade credit is also used as a matter of convenience. It is convenient to obtain, because the purchaser
receives the goods from the seller when the latter sends the goods on receipt of the order form the
former. The purchaser is to make payment on a stipulated date. But obtaining finance from the
financial institutions is not so easy. Many formalities are to be performed to obtain funds from such
institutions.
Trade credit has also got widespread use because of the fact that it is less risky than other sources of
funds. If the credit can not be repaid by the end of the credit period, the trade creditors usually don’t
proceed to liquidate the firm. If the default is only for a few weeks or a month and does not occur
frequently, the creditor may not even be heard from.
When other sources of obtaining funds are closed to a business organization trade credit may be
obtained easily. This is especially true of small concerns. Such enterprises do not usually possess a
good credit standing and that’s why, they can not approach big lending intuitions for loans.
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5. Short Term Financing
The banks, insurance companies and other finance companies hesitate to lend funds to the business
enterprises that are small in size and financially weak. They fear that these enterprises would not be
able to repay the debt on maturity. As such, the small business concerns rely mostly on trade credit.
DISADVANTAGES OF TRADE CREDIT
Cost of Trade Credit:
To a business man, the cost of trade credit is that additional cost which he may pay if he does not take
the cash discount offered by the creditor for prompt payment. The cost of trade credit is found to
occur when the firm forgoes the cash discount and pay its bill on the final due date of the net period.
If no cash discount is offered, there is not cost for the use of credit during the net period. By the same
token, if a firm takes the discount there is not cost during the discount period. The cost of not taking
the cash discount when offered can be substantial. For example, if the credit term is 1/10. n/30, the
cost would be 18.18% and if the credit term is 2/10, n/30, the cost would be 36.72%. In the latter case,
the firm has the use of funds for an additional twenty days if it does not take the cash discount but
pays on the final day of the net period. In the case of Tk 100 in voice, it would have the use of Tk 98
for 20 days. Thus the annual interest cost is 36.72%.
Discount Rate (%)
360
Cost = ---------------------------- X ---------------------------------------100-Discount Rate
Credit Period-Discount Period
If the length of the net period is longer in relation to the discount period, the cost of trade credit
declines.
For
instance,
the
cost
in
case
of
2/10,
n/60
would
be
14.7%.
The cost of trade credit decreases at a decreasing rate as the net period increases. If a firm does not
take cash discount, the cost of trade credit declines the longer it is able to postpone payment.
The relationship between the annual interest cost of trade credit and the number of days between the
end of the discount period and the end of the net period is shown in the following figure:
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