Got a tricky question? Receive an answer from students like you! Try us!

Financing of Working Capital and the Money Markets - Essay Example

Only on StudentShare
College
Essay
Miscellaneous
Pages 5 (1255 words)

Summary

In this short essay, the author presents an analysis of the money markets as source of short term finances for the working capital of organizations. The author starts with the money market instruments in Croatia and then presents the long term finance options for working capital as well…

Extract of sample
Financing of Working Capital and the Money Markets

[http://www.hnb.hr/financijska_stabilnost/efinancijka_sustav.htmtsfsg=79cfa8abff72343c706696777f2a1c18].
The most marketable money market security available in Croatia are the "Government Treasury Bills" that are issued with the maturity deadline of 91, 182 and 364 days [http://www.mfin.hr/en/public-debt]. The second form of money market instrument used in Croatia is the "Certificate of Deposit" that is issued by commercial banks and available through brokers. Certificate of Deposit is a kind of time deposit offered by banks to corporations, local & state governments, and foreign investors that competes with other instruments of the money markets. It is the mechanism by which banks consolidate surplus funds from entities and lend them to other entities in need of short term funds whereby they make money by charging higher interest rates to borrowers than what is offered to the depositors. Hence banks function as financial intermediaries that are primarily interested to channel money to the customers paying highest interest rates and manage the risk of defaults effectively. They compete in the money markets primarily by virtue of their services and interest rates (McKinney Jr. 1967. pp71-73).
In Croatia, the certificate of de ...
Download paper
Not exactly what you need?

Related Essays

Working Capital Management Analysis
Cash flow can be defined as 'the pattern of income and expenses, and its consequences for how much money is available at a given time'…
3 pages (753 words)
Working capital
Accounts receivable analysis is very important for cash is the lifeblood of the company. Accounts receivable must be converted to cash as soon as possible. This is where the AVERAGE COLLECTION PERIOD financial management tool is used regularly.…
13 pages (3263 words)
Working Capital Management
Gross Working Capital: It refers to the firm's investment in current assets. Current assets in year 2006- 2000000 and in 2007- 2470000. It increased significantly instead of dip in cash because of nearly 71% increment in debtors and 58% increment in inventory of finished goods, but cash reserve dipped by 96% and tightens the liquidity position of company by the end of 2007.…
4 pages (1004 words)
Working Capital and Financial Environment
in this case, the most important elements in the environment are the other actors involved either directly or indirectly with a production process. In assessing the internal environment, the professionals try to identify all the relevant actors paying attention to stated goals and strategies. Abbott and Merck requires huge financial resources on research and development and financial internal…
2 pages (502 words)