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

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