So it's for my last financial rambing (maybe) for this month. Now it's time to do some comprehension on managing liabilities. Tomorrow I'll read through everything again but no compression okay? I need to ease my mind. =)
What are the main sources of liabilities and differentiate them?
The two main sources are accounts payable and accruals. Accounts payable are where the company borrows money to its creditor or owes money to its suppliers (ex. unpaid purchases). The accruals are unpaid services like labor and government fees. While fees for labor can be adjusted, government fees cannot.
What are the components of payment periods?
The payment periods are composed of the time to where the purchase is made and when payment is given. The second is the payment float time where there is the difference of the time the payment was made to when the company decides to withdraw.
What is the credit discount?
The credit discount is where the company offers to lower down the interest if it's paid within a discount period. The company can choose to avail of it by paying during the discount period or drop it by paying after the discount period.
What are the unsecured sources of loans?
The unsecured sources of loans are usually short term, they are borrowed when there is an inventory buildup and an increase of accounts receivable. They may be floating or fixed.
The bank loans can be divided as the single note payment, the line of credit and the revolving credit agreement. Single note payments are one-time, short-term loans with the bank expressed in a certain amount until maturity for individuals. The line of credit is a credit agreement between the company and the banks. The revolving credit agreement serves as a guarantee to credit, it has a 0.5% commitment fee for unused portions and though more expensive than line of credit, it is less risky.
The commercial paper is an unsecured loan, short-term, issued by a company of good credit standing. It usually has from 3 to 270 days with multiples of 100,000 or above. It can be also sold as a security.
What are the differences of a floating loan from a fixed loan?
The fixed loan is where from the time of borrowing to the time of maturity, the rate remains the same. The floating loan has its initial, then it may go up or down until the maturity.
What may serve as collateral?
Accounts receivable and inventory may serve as collateral. They are usually valued 30 to 100 percent of the book value of the collateral.
For the accounts receivable, you have the pledge accounts receivable which are accounts receivable being pledged to be used as collateral and the factoring accounts receivable where accounts receivable are sold at a factor or at a discount.
The inventory collateral has the floating lien for general merchandise, the trust receipt for more expensive goods like automative and industrial goods with serial numbers (usually at a 80-100% advance) and the warehouse receipt where the collateral is held at the terminal warehouse or the field warehouse where the goods cannot be removed without permission of the lender.
What are the main sources of liabilities and differentiate them?
The two main sources are accounts payable and accruals. Accounts payable are where the company borrows money to its creditor or owes money to its suppliers (ex. unpaid purchases). The accruals are unpaid services like labor and government fees. While fees for labor can be adjusted, government fees cannot.
What are the components of payment periods?
The payment periods are composed of the time to where the purchase is made and when payment is given. The second is the payment float time where there is the difference of the time the payment was made to when the company decides to withdraw.
What is the credit discount?
The credit discount is where the company offers to lower down the interest if it's paid within a discount period. The company can choose to avail of it by paying during the discount period or drop it by paying after the discount period.
What are the unsecured sources of loans?
The unsecured sources of loans are usually short term, they are borrowed when there is an inventory buildup and an increase of accounts receivable. They may be floating or fixed.
The bank loans can be divided as the single note payment, the line of credit and the revolving credit agreement. Single note payments are one-time, short-term loans with the bank expressed in a certain amount until maturity for individuals. The line of credit is a credit agreement between the company and the banks. The revolving credit agreement serves as a guarantee to credit, it has a 0.5% commitment fee for unused portions and though more expensive than line of credit, it is less risky.
The commercial paper is an unsecured loan, short-term, issued by a company of good credit standing. It usually has from 3 to 270 days with multiples of 100,000 or above. It can be also sold as a security.
What are the differences of a floating loan from a fixed loan?
The fixed loan is where from the time of borrowing to the time of maturity, the rate remains the same. The floating loan has its initial, then it may go up or down until the maturity.
What may serve as collateral?
Accounts receivable and inventory may serve as collateral. They are usually valued 30 to 100 percent of the book value of the collateral.
For the accounts receivable, you have the pledge accounts receivable which are accounts receivable being pledged to be used as collateral and the factoring accounts receivable where accounts receivable are sold at a factor or at a discount.
The inventory collateral has the floating lien for general merchandise, the trust receipt for more expensive goods like automative and industrial goods with serial numbers (usually at a 80-100% advance) and the warehouse receipt where the collateral is held at the terminal warehouse or the field warehouse where the goods cannot be removed without permission of the lender.
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