Lecture 42 - Business Finance(ACC501 Lesson 42 Review of...

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222 Business Finance (ACC501) Lesson 42 Review of the Previous Lecture Short-Term Financial Policy Flexible vs. Restrictive Policies Alternative Policies Choosing the Best Policy Cash Budget Topics under Discussion Short-Term Borrowing Float and Cash Management Reasons and Benefits of Holding Cash Cash Collection Short-Term Borrowing Unsecured Loans Line of credit Committed vs. Noncommitted Committed being formal arrangements involving a commitment fee Noncommitted being an informal channel involving lesser paper work Revolving credit arrangement Open for two or more years Letter of credit Secured Loans Accounts receivable financing Assigning Borrower is responsible even if receivables are not collected Factoring Receivable is discounted and sold to lender (factor) who then bears the risk of default Maturity Factoring Factor forwards the money on an agreed-upon future date Secured Loans Inventory loans Blanket inventory lien – Gives a lien against all the inventories Trust receipt
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