{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

KIC000121 - 'i.i Captive Finance Subsidiaries subsidiary...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 'i .i Captive Finance Subsidiaries subsidiary whose prim purpose is to: Cl Finance sales at the mpeny's products and 1 services :_‘ El vaidewholeaele financing to —®—oflhe parents 2‘ I A captive finance subsidiary (CFS) is a wholly owan l l company's pr note ‘ j 1:! Purchase of the parent company . I An operating ent between the captive and the parent company contains specific stipulations ' n: I The numbers of CFSs grew rapidly between 1946 and 1960 as a result of liberalized credit policies and a need to finance growing inventories Captive Finance Subsidiaries (cont'd) I A CFS: a Can be used to finance distribmor or dealer ll'WOnlOflS! until a sale occurs l:I Can serve as an efioctive —®— by providing retail financing l Advantages of captive finance subsidiaries (It A CFS allows I corporation to sap-ate ill mnmflaoturmu and retailing activities! its activities D ACFS hIs no—% and no at pruhibitiomon how it obtains funds or use: tund a Sale items such as cots may depend on the financing errlnnemonts availabte I CF35 have diversified their financing activinesto include more than just the parent company's products : Sources of Finance Company ;; i Funds I Loans from banks in Finance companies commonly borrow from commercial banks and can consistently renew the toms overtime S 3 a Some finance companies use bank loans mainly to accommodate seasonal swings in their bustness I Commercial paper El Only the most well-known finance companies have been abte to issue commercial paper I: As secured commercial paper has become more popular, mos1 finance companies have access to this market :1 Most finance companies issue cornmeru‘el paper using commercial paper dealers I The best-known finance companies can Isz commercial: paper through direct placement A any.» “Mn-a.“ I ...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online