Sources of Funds There are several sources of finance/funds available to any company. Some of the parameters that need to be considered while choosing a source of fund are: • • Tenure • Leverage planned by the company • Financial conditions prevalent in the economy • 2. Cost of source of fund Risk profile of both the company as well as the industry in which the company operates. Categories of Sources of Funds (i) Long term Refer to those requirements of funds
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SOURCES OF SHORT TERM FUNDS Referring to any investment‚ financial plan‚ or anything else lasting for one year or less. Short term investments and financial plans usually involve less uncertainty than long-term investments and financial plans because‚ generally speaking‚ market trends are more easily predictable for one year than for any longer period. Likewise‚ short-term financial plans are more easily amendable as a result of the short time frame. Short-term financial plans usually involve investing
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SHREYA JAJOO 1421646 SOURCES FOR LONG TERM FINANCE Long-Term Finance Long-term finance is borrowed capital that will be repaid over a specific time period longer than one year. Need for Long-Term Finance Long-term finance is required for modernization‚ expansion and diversification within the company or its products. It is when the company requires huge quantities of goods or services. Long-term finance decision is an irreversible decision. Sources of Long-term Finance: 1. Equity Capital
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Mark Butler‚ sole owner and president of the Butler Lumber Company has approached George Dodge of the Northrop National Bank with a request for a loan of $465‚000 to finance the company’s anticipated growth in the near future. The company’s current bank cannot provide it with an amount higher than $250‚000‚ a figure too low to meet its substantially large working capital requirements. It is for this reason that Mr. Butler is seeking the new banking relationship. The problem that lies before‚ Mr.
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Butler Lumber Company Background: Butler Lumber Company was founded in 1981‚ in a large city in the Pacific Northwest. Typical products of the company included plywood‚ moldings‚ and sash and door products. After a rapid growth in its business during recent years‚ the company in the spring of 1991 anticipated a further substantial increase in sales. Despite good profits the company experienced a shortage in cash and found it necessary to increase its bank borrowings. Issues: • Butler Lumber
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Butler Lumber Company I. Statement of Financial Problem Butler Lumber Company is facing the internal risk of not having enough borrowing power to continue operations as desired. The owner of the company has established a relationship with a new bank to increase their borrowing power‚ however‚ based on Butler Lumber Company’s past Operating Statement and Balance Sheet‚ the company is expecting to continue substantial growth without considering external risks that may affect their business. Currently
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BUTLER LUMBER COMPANY 關於Butler Lumber Company(以下簡稱BLC)的借貸案，我們選擇站在Northrop National Bank(以下簡稱NNB)的角度來看是否該提供借貸，共考慮三個部份：1)BLC的徵信程度，2)BLC的財務報表狀況，3)BLC的擔保品品質。以下將針對這三方面來探討： 一、BLC的徵信程度 在評估借貸案時，NNB向幾家BLC的往來廠商發函調查，以作徵信之用。回函廠商皆對經營者有信心，以及對BLC本身的營運情況有著正面的看法。 接下來NNB需要評估BLC的財務報表，以了解實際的營運情況。 二、BLC的財務報表狀況 BLC 1988 1989 1990 負債比率 54.55% 58.70% 62.70% 流動比率 180.00% 158.93% 145.05% 速動比率 88.08% 72.00% 66.92% 現金對流動負債比率 22.31% 12.80% 7.66% 存貨週轉天數 71.755 69.631 應收帳款週轉天數
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in a company and if so how? | |In: Business Accounting and Bookkeeping [Edit categories] | [pic]CFA Designation Certified Financial Accountant Designation www.socfa.org [pic] [Improve] [pic] Answer Depreciation does not generate cash flow. If a million dollar piece of equipment is purchased‚ an accountant would reflect that the company now owns
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Why does the company need funds? First‚ Butler Lumber Company in the spring of 1991 anticipated a further substantial increase in sales. It means there are more working capital associated with the company’s increasing sales volume. Second‚ although they have good profits‚ the company had experienced a shortage of cash. The company’s current borrowing from Suburan National Bank almost reaches the maximum loan that SN Bank would make. Meanwhile‚ the SN Bank now asks Butler Lumber to secure the loan
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Butler Lumber Case Study I. Statement of Financial Problem Butler Lumber Company‚ a growing profitable business has exhausted its credit limit and the key issues facing it are: 1. Need for additional funds to continue the growth 2. Need to consolidate debt 3. Need to improve cash flexibility. In this case study I will be discussing following problem: Why has Butler Lumber been profitable in the increasing volume of sales but at the same time it is experiencing cash difficulties
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