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Financing The short Term Obligations of the Business (BMW vs Mercedes) - Assignment Example
Author : jadams
Finance & Accounting
Pages 4 (1004 words)
Financing the Short Term Obligations – BMW and Mercedes [Instructor Name] Financing the Short Term Obligations – BMW and Mercedes Introduction While going through the day-to-day affairs, a company comes across various situations requiring short-term finance…
Since these finances are obtained for short terms, therefore they are required to be paid back to the lenders earlier in comparison with the long-term finances. Thus obtaining short term finance for business gives rise to short term obligations, and these short term obligations may include short term loans, amounts owed to the suppliers of the business, amounts owed to other parties to whom payments have to be made but have not been paid yet, accrued expenses which also include payments to be made to third parties for their services provided to the business entity. The payment of the short-term obligations is an area of concern for every business enterprise. Considering the available resources of liquid cash reserves, a business entity may opt to finance its short-term obligations by releasing some cash, which serves the purpose. On the other hand, if the cash reserves available with the company are not considered to be sufficient for the purpose of paying of short-term obligations, the company may chose to consider other options for financing such obligations (Besley and Brigham 2005). This report presents an analysis of the financing of short-term obligations for BMW and Mercedes. ...