FIN 200 Checkpoint Short-term Financing

FIN 200 Checkpoint Short-term Financing - Write a 200-300...

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Write a 200-300 word paper listing the different sources of short-term financing. Discuss the characteristics of each source and explain why a company might choose one over the other. The main sources of short-term financing are: 1. Overdrafts 2. Short-term loans and 3. Trade credit Each of these is explained in more detail. Overdrafts Where payments from a bank current account exceed income to the account for a temporary period, the bank finances the deficit by means of an overdraft. They can be arranged quickly and offer a range of flexibility with regard to the amount borrowed at any time, whilst interest is only paid on the amount overdrawn. The main characteristics of an overdraft are enumerated below: Overdrafts Amount Should not exceed the limit, usually based on known income Margin Interest charged at base rate plus margin on daily account overdrawn and charged quarterly. Fee may be charged for large facility. Purpose
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This note was uploaded on 05/10/2011 for the course FIN 200 taught by Professor Emil during the Spring '11 term at Aberystwyth University.

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FIN 200 Checkpoint Short-term Financing - Write a 200-300...

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