...Credit Cards and Cash There is very importance of money in our life. “When you have money in hand, only you forget who you are. But when you do not have any money in your hand, the whole world forget who you are”. This is the saying of a famous US Microsoft founder “Bill Gates”, from which one can easily understand the need of money in life for living and simplification. Among the different forms of money for financial transactions, Credit cards and Cash are the two major types. In spite of being both money, they have differences too. The differences between these two can be related as the advantage of one and disadvantage of others. Using of credit cards offers credit rewards like certain percentage of cash back which is not possible through the use of cash for transactions. Credit cards are more convenient than cash, as one can do online shopping using it while cash has disadvantage over it. Credit cards provides more security than cash. Use of credit card might require a signature and a PIN while for the use of cash nothing special is needed so if stolen cash draws more disadvantages over security. The loss of credit cards does not affect much as we can easily stop the use of that card and apply for the next card just by informing the bank. But if cash is stolen then one needs to rush to police station and needs to write a report of theft. Carrying a credit card, no one will know the amount of money you are carrying so even less chances...
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...below: 1. Trade credit 2. Bank credit – Loans and advances – Cash credit – Overdraft – Discounting of bills 3. Customers’ advances 4. Installment credit 5. Loans from co-operatives ------------------------------------------------- 1 . Trade Credit Trade credit refers to credit granted to manufactures and traders by the Suppliers of raw material, finished goods, components, etc. Usually business enterprises buy supplies on a 30 to 90 days credit. This means that the goods are delivered but payments are not made until the expiry of period of credit. This type of credit does not make the funds available in cash but it facilitates purchases without making immediate payment. This is quite a popular source of finance. ------------------------------------------------- 2 . Bank Credit Commercial banks grant short-term finance to business firms which is known as bank credit. When bank credit is granted, the borrower gets a right to draw the amount of credit at one time or in instalments as and when needed. Bank credit may be granted by way of loans, cash credit, overdraft and discounted bills. ( i ) Loans When a certain amount is advanced by a bank repayable after a specified period, it is known as bank loan. Such advance is credited to a separate loan account and the borrower has to pay interest on the whole amount of loan irrespective of the amount of loan actually drawn. Usually loans are granted against security of assets. ( i i ) Cash Credit It is an arrangement...
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...4 Demand for Credit: Companies demand credit for various operating, investing and financing activities. Operating activities – many companies have cyclical operating cash needs. For example, manufacturers of inventory or retailers that purchase merchandise for the end of year holiday season. Investing activities – companies routinely require large amounts of cash for investments including purchases of new equipment and property and for corporate acquisitions. Important for start-ups and growth companies. Financing activities – for issuance of debt for repayment of maturing debt obligations or the repurchase of common stock. Supply of Credit: Trade credit – from supplies is routine and most often non-interest bearing. Bank loans – banks structure financing to meet specific client needs. Bank regulators require that banks hold capital in proportion to their loan portfolio. Revolving credit lines – loans that companies draw on as needed. They are like credit cards because a company can take cash out as needed and make payments as cash is available. Lines of credit – are guarantees that funds will be available when needed. These LOC act as backup or interim financing. Letters of credit – facilitate private international transactions. A letter of credit interposes a bank between the two parties to a transaction. The letter provides a guarantee of payment from the buyer. The benefit is that is substitutes the bank’s credit rating for that...
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...A firm’s excess cash balance during a particular month could be best deployed if it wereAnswer | Selected Answer: | financed with short term investments | Correct Answer: | invested in short term investments | | Question 2 2 out of 2 points | | | If a firm purchases materials on credit and thus has accounts payable, its cash conversion cycle will be:Answer | | | | | Selected Answer: | shorter than its operating cycle | Correct Answer: | shorter than its operating cycle | | | | | Question 3 2 out of 2 points | | | Deposits placed in foreign banks that remain denominated in U.S. dollars are called:Answer | | | | | Selected Answer: | Eurodollars | Correct Answer: | Eurodollars | | | | | Question 4 2 out of 2 points | | | Calculation of a firm’s average collection period is the same as calculating the:Answer | | | | | Selected Answer: | accounts receivable cycle | Correct Answer: | accounts receivable cycle | | | | | Question 5 0 out of 2 points | | | ___________ are short-term money market investments that are extremely safe and liquid; they can be quickly converted into cash at values very close to their intrinsic values.Answer | | | | | Selected Answer: | preferred stocks. | Correct Answer: | marketable securities. | | | | | Question 6 0 out of 2 points | | | A negative cash conversion cycle indicates that theAnswer | | | | |...
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...Student Company Internal Control Analysis |Process |Control Owner |Frequency |Documentation and execution |Control Review Process | 1. CASH DISBURSEMENTS |Approval of Vendor Invoices|A/P Clerk |Weekly |A/P Clerk collects vendor invoices, records |A scanned copy of the approved vendor | | |Purchasing Manager | |vendor invoices in the system, and gets vendor |invoices are kept in the system. Large | | | | |invoices approved by the Purchasing Manager |invoices are periodically reviewed, other | | | | | |invoices can be retrieved on an as needed | | | | | |basis. | |Printing Checks, Preparing |A/P Clerk |Weekly |A/P clerk prepares cash disbursement vouchers, |Treasurer reviews the cash disbursement | |Cash Disbursement Vouchers | | |which includes a copy of each approved invoice.|vouchers, and weekly check run prepared by| | | | |A/P Clerk prints the...
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...operating expenses, including paying its sales team on commission and keeping overhead low. Financing is another key in a business and is a large factor that will determine the success of Jones Electrical is their financing. Jones Electrical needs to take out larger loans in order to build up inventory and increase sales. Also by taking loans the company is able to take advantage of the 2% purchase discounts that its manufacturers provide. The company’s financials show that with an increase in its line of credit the more sales it has, resulting in growth and a higher net income. 2. Why does a business that has a profit of $30,000 per year need a bank loan? A loan in many cases for companies is something that is necessary to have a successful growth and create excellent opportunities. The company’s biggest problem is its shortage of cash. With the extra cash Jones Electrical will be able to buy more inventories which will help it to grow and increase sells. The cash will also allow Jones Electrical to take advantage of the 2% purchase...
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...INTERNSHIP REPORT ON LOAN ADVANCEMENT PROCEDURE OF IFIC BANK LIMITED LOAN ADVANCEMENT PROCEDURE OF IFIC BANK LTD. Submitted to MAHMUDUL HAQ ADVISOR BRAC BUSINESS SCHOOL BRAC UNIVERSITY Submitted by MST. NAZMUN FARZANA ID: 09104103 BRAC BUSINESS SCHOOL BRAC UNIVERSITY date oF SubmiSSioN 17TH DECEMBER, 2012 LETTET OF TRANSMITTAL 17TH DECEMBER, 2012 Mahmudul Haq Course Instructor, BBS BRAC University Dear Sir, Here I present my Internship report titled “Loan And Advance Operation of IFIC Bank Limited‟ with due gratitude and appreciation. As per partial fulfillment of the requirements for the BBA Degree, I have completed the internship from IFIC Bank Limited, Federation Branch, Motijheel, Dhaka. The internship program has given me the opportunity to learn about different aspects of this well reputed organization. Before facing the corporate world, I have gathered general idea about the organization culture and activities. However, I have gathered all the facts that I could within this short period and have tried my level best to exert all the things as much presentable as possible. Yours faithfully, ………………. Mst. Nazmun Farzana ID: 09104103 Acknowledgement At the beginning, I would like to express my sincere gratitude to Almighty, the most merciful and beneficial for empowering me to prepare the report within the scheduled time. I also want to thank especially to my internship supervisor Mahmudul Haq Sir for his inspiring guidelines, valuable suggestion, constructive...
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...Acknowledgement First of all, I am expressing my sincere great fullness to almighty to prepare this term paper, no noble achievement can be achieve by an individual term paper depends on the contribution of number of people specially their thoughtful guidance and suggestions to complete this term paper. I am indented for their kind recommendation, submission, direction, cooperative and their collaboration. I want to give my special thanks to the Academic Supervisor Professor Md. Didarul Islam, Department of Accounting for his support and enormous help, especially his guidelines throughout the period of preparing this term paper. Declaration I do hereby Solemnly declare that the work submitted in the term paper titled “Sources of Short-Term Financing in Bangladesh” has been carried out by me and has not been previously submitted to any other university, college, organization for an academic purpose or certificate or diploma degree. This work that I have submitted does not break any existing copyright and no portion of this report is copied from any work done earlier for a degree or otherwise. I further undertake to indemnify the department against any loss or damage arising from breach of the forgoing obligations. Md. Golam Kibria BBA(hon’s) Final Year Reg. No. 09101626055 Major: Accounting Supervisor’s Certificate This is to certify that the term paper on “Sources of Short-Term Financing in Bangladesh” submitted for the award of the Degree of Bachelor of Business Administration...
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...D-C vs D-C-S agreements D-C-S (debtor-credit-supplier) A D-C-S agreement is an agreement made by the creditor under a pre-existing arrangement, or in contemplation of such a future arrangement, between himself and a supplier, or which is financing a transaction between supplier and debtor. For example, a finance company which routinely deals with a motor dealer and the credit is to fund the purchase of a vehicle, or a high street retailer with existing links to a lender. D-C (debtor-creditor) A D-C agreement in essence is the same, but without funding a transaction between the debtor and a third party supplier. For example, a cash loan to a consumer or a credit card. Even if the creditor has given the cash loan for a restricted use (ie specifically for the purchase of a laptop and for no other purpose), if the consumer has the cash and the freedom to spend it with any supplier there is no ‘pre-existing arrangement’ or contemplation of same. Which is the case depends on the facts of the transaction and it will be for the creditor to make that assessment. For general guidance see ‘Regulated and Exempt Agreements’ OFT140a – also for points 2 and 3 below. 2. Why is it important? (a) Firstly, many of the exemptions turn on the nature of the agreement. The ‘Credit Union’ exemption for example applies only to debtor credit agreements. Other exemptions apply only to D-C-S agreements. As such it important to determine the precise nature of the agreement. ...
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...report to know about the marketing policies Bank Limited. This Bank tries to provide higher quality services which leads to higher customer satisfaction. The information of the report has collected from secondary sources like books, published reports and website of the Sonali Bank Limited. It include source of existing/published data, such as: Operational manual, official website, banking journals. Research papers and account statement. From data analysis, I found that customer have chosen Sonali Bank Limited for its goodwill an d security, effective loan & advance system as will. Its most satisfied service is providing credits to the customers. Sonali Bank Limited should give more effort to make well establish market in the context of Bangladesh. Sonali Bank Limited should be more flexible to disburse loan & advance. The bank should be increased cash counter. Sonali Bank Limited provide loan in different sector. Background of the study: Internship is a prerequisite for completing the practical side to fulfill the BBA program. Theoretical session along cannot make a business student efficient and perfect in handling the real life business situation. Only a lot of knowledge will be little important unless it is applicable in practical life. So we need proper application of our knowledge to get some benefit from our theoretical knowledge to make more fruitful. The internship program is the means: 1) Orientation of the organization: to introduce the internee with the structure...
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...Internship report on Credit Appraisal of NCC Bank Ltd. PREPARED FOR Ms Halima Begum SeniorLecturer Department of Business Administration Leading University, Sylhet PREPARED BY: Fathema Jannath ID: 1201010750 Department of Business Administration Leading University, Sylhet Date: July 11, 2013 Credit Appraisal Of NCC Bank Ltd. LETTER OF TRANSMITTAL Date: 11th July, 2013 To The Supervisor Department of Business Administration Leading University Sylhet Subject: Submission of Internship Report Dear Madam, I am grateful to you for the submission of the report on “Credit Appraisal of NCC Bank”, Elephant Road Foreign Exchange Branch in the completion of the requirement for internship. This is an excellent opportunity for me to acquaint more closely with the organization. The association and coordination of all respective officers & staffs with me are full of exciting, re-discovering and entertainment. During the period of doing this report I have discovered and gained new & practical feelings, observations and learning. I have my utmost effort to reflect experience, skill and knowledge, which I acquired at the time of working at NCC Bank. All of my efforts will be successful if the thesis paper can serve its purpose. I have tried my best to explain everything related with the Credit Appraisal in this paper. Yours faithfully Fathema Jannath ID: 1201010750 Department of Business Administration Leading University Sylhet ...
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...investigation or discussion of a known and unknown matter and to make a right decision by the knowledge is the main theme of internship. So, internship is standard method taken for searching knowledge i.e. it is the combination of theoretical and practical knowledge 2. Objectives of the study The main purpose of this study is to investigate and observe into the loan disbursement and recovery of Sonali Bank Limited, Sopura Branch, Rajshahi and to provide some suggestions to improve its performance. However, followings are some of the specific objectives of the study: ❖ To know general banking activities performed by the bank. ❖ To find out the comparative position of the bank. ❖ To identify various loans, advances and credit provided by the bank. ❖ To know the amount of disbursement and recovery of the bank. ❖ To know what are the vouchers and documents are used. ❖ To know the vouching and accounting system of the bank....
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...The five key elements a borrower should have to obtain credit: character (integrity), capacity (sufficient cash flow to service the obligation), capital (net worth), collateral (assets to secure the debt), and conditions (of the borrower and the overall economy). Read more: http://www.investorwords.com/1/5_Cs_of_credit.html#ixzz31ZgXR6d3 When banks start to tighten lending to the small business market, they look to reduce the risk of issuing a small business loan. To qualify, a small business must understand the risk assessment processes bankers use in loan determinations. Bankers making a loan approval will review a small business in the context of the 5 C's for small business loans and credit as follows: The 5 C's of Small Business Loans Qualification Character: The bank assesses the trustworthiness of candidates for character. Factors for character criteria are: business experience and knowledge, personal and/or small business credit history, references, and education. Capacity: The business and individual's ability to pay back the small business credit determines capacity. Bankers will review the cash flow of the business and determine alternative courses of repayment available. Collateral: To reduce the risk of lending, collateral in various forms of assets can act as another method of repayment. Collateral would include: equipment, real estate, inventory, account receivables, and securities. A personal guarantee (signed document) can be required as an additional...
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...Principles of Managerial Finance Solution Lawrence J. Gitman CHAPTER 15 Curent Liabilities Management Instructor’s RESOURCES Overview This chapter introduces the fundamentals and describes the interrelationship of net working capital, profitability, and risk in managing the firm's current liability accounts. The management of current liabilities requires choosing appropriate levels of financing and involves trade-offs between risk and profitability. This chapter also reviews sources of secured and unsecured short-term financing, including the role of international loans. Spontaneous sources, such as accounts payable and accruals, are differentiated from negotiated bank sources, such as lines of credit. The cash discount offered on accounts payable and the costs of forgoing the discount are described. Secured sources include bank and commercial finance company loans backed by collateral such as inventory or accounts receivable. PMF DISK This chapter's topics are not covered on the PMF Tutor or the PMF Problem-Solver. PMF Templates The following spreadsheet template is provided: Problem 15-8 Topic Cost of bank loan Find out more at www.kawsarbd1.weebly.com 393 Last saved and edited by Md.Kawsar Siddiqui Part 5 Short-Term Financial Decisions Study Guide The following Study Guide examples are suggested for classroom presentation: Example 1 4 Topic Loss of loan discounts Accounts receivable as collateral Find out more at www.kawsarbd1.weebly.com 394 ...
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...Liabilities Management ( Learning Goals 1. Review the key components of credit terms, accounts payable, and the procedures for analyzing them. 2. Understand the effects of stretching accounts payable on their cost and on the use of accruals. 3. Describe interest rates and the basic types of unsecured bank sources of short-term loans. 4. Discuss the basic features of commercial paper and the key aspects of international short-term loans. 5. Explain the characteristics of secured short-term loans and the use of accounts receivable as short-term-loan collateral. 6. Describe the various ways in which inventory can be used as short-term-loan collateral. ( True/False 1. Accounts payable are spontaneous secured sources of short-term financing that arise from the normal operations of the firm. Answer: FALSE Level of Difficulty: 1 Learning Goal: 1 Topic: Accounts Payable 2. Notes payable can be either spontaneous secured or spontaneous unsecured financing and result from the normal operations of the firm. Answer: FALSE Level of Difficulty: 1 Learning Goal: 1 Topic: Notes Payable 3. Accounts payable result from transactions in which merchandise is purchased but no formal note is signed to show the purchaser’s liability to the seller. Answer: TRUE Level of Difficulty: 1 Learning Goal: 1 Topic: Accounts Payable 4. In credit terms, EOM (End-of-Month) indicates that the accounts payable must be paid...
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