Financing the Short Term Obligations

Financing the Short Term Obligations Coursework example
High school
Coursework
Finance & Accounting
Pages 4 (1004 words)
Download 0
Financing the Short term Obligations Name Course Instructor’s Name University Date of Submission Financing Introduction The purpose of this report is to assess and analyze the financing of short term debts and obligations. The report has been segmented into two parts…

Introduction

Body Paragraphs Task 1 Short term financing is vital for any kind of business in order to meet its financial necessities in a short period of time. Consequently, there are various sources of attaining short term debts. However, the four primary sources of short term finance available to any business comprise of Trade Credit, Bank Credit, Customers’ Advances and Commercial Paper. Trade Credit implies the allowance of credit businesses by the providers of raw materials and other equipment. In this type of financing, though no cash is allotted to the business, but it is given the permission to holdup the payment for the goods up to the extinction of the credit. Bank Credit is another significant source of short term financing which allows businesses to draw credit at once or in phases. There are various sub-categories of Bank Credit such as Loans, Cash Credit, Overdraft and Discounting of Bill. The third short term financing source is Customers’ Advances in which businesses ask customers to pay a part of their payment in advance. This is often the case when orders are large as it facilitates the company to overcome its short-term necessities (World Academy Online, 2011). ...
Download paper
Not exactly what you need?

Related papers

Short-term obligations
.9 Introduction ‘Short-term’ obligations are liabilities owed by an institution to outsiders and are due within a period of less than one year. They can be understood as part of an organization’s assets that have been contributed by external sources. The obligations include creditors, accrued expenses, and ‘short-term’ loans. This paper seeks to discuss the financing of ‘short-term’…
Financing the Short Term Obligations of The Business
Sources of short term finances available to a business 1. Trade credit – this is also referred as suppliers’ credit, ledger credit or open book account. It is needed when commercial purchases are not to be cleared immediately. In this case the company holds an accounts payable for the amount it owes to the suppliers while in turn running business on not paid for bills. Trade credit varies in…
Financing The short Term Obligations of the Business (BMW vs Mercedes)
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…
Financing the Short Term Obligations of The Business
Trade Credit implies the allowance of credit businesses by the providers of raw materials and other equipment. In this type of financing, though no cash is allotted to the business, but it is given the liberty to delay the payment for the goods up to the termination of the credit. Bank Credit is another popular source of short term financing which allows businesses to draw credit at once or in…
Financing the Short Term Obligations of The Business
And, the day-to-day operations include payment of wages to employees and payment for inventory as well. Technically speaking, time duration covering the definition of short term finance is of one year. Any short term finance must be repaid within one year period. Following are the four different sources of short term finance available to business: Overdrafts Trade credit Short term loans Lease…
Financing the Short Term Obligations of The Business
b. Retained earnings Retained earnings are profits that have been retained within the business for use in the operation of the business instead of being paid out as dividends to its shareholders. One of the operational uses of profits retained in the business is meeting the business short-term obligations. c. Capital Market Sourcing funds through the capital market simply meant getting additional…
Financing: Long Term and Short Term
There are two major categories of financing that normally exist in most businesses (Jim, 2011). These categories are short term and long term financing methods. These categories basically differ in the period for which they are provided to the business. For instance, short term financing is a type of financing that is provided for a short period of time, usually not exceeding one year, to the…