...short term finance. Bank Overdraft Most businesses have an account with a bank. The bank deals with all the deposits (money put into the account) and withdrawals (money taken out). Most banks know that businesses do not always receive money from sales straight away. If you run a sandwich bar in a local trading estate then you Sources of Finance Managing Financial Resources & Decisions might get money straight away when you sell your sandwiches. If you are a business selling electrical equipment to an electrical retailer then you may not get paid straight away when you deliver your goods. When differences occur in the money a business receives from sales (its revenue or turnover) and the money it has to pay out on labour, machinery, equipment, distribution and so on (its costs) the firm can face difficulties. The money flowing into a business from sales and the amount it spends on costs that go out of the business is called its cash flow. Cash inflows to a business Cash outflows from a business (Revenue from sales, loans, interest, sales of assets etc (Payment for raw materials, stock, labour, insurance, rent, rates etc.) A business might need to pay a bill on the 28th November for £1,500 but not have enough money in its account to pay the bill. It might know that it is due to receive £3,500 from a customer on the 10th December but in the meantime it has a cash flow problem. This is when it is appropriate to arrange an overdraft with a bank. An overdraft is an agreement with...
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...Browning Electrical Company TIMELINE After reading the case study, I put together the following timeline diagram so as to assist me with understanding the case study. Figure 1: Timeline Figure 1: Timeline Although a steady growth rate of 33% has been maintained, the ineffective management of current assets (receivables and inventory) has resulted in a cash flow problem. Positive issues are: * There has been rapid growth in recent years and this is expected to continue in future. * The location of the company is good with access to a railway siding. * The sales have increased annually and are expected to reach R 25 000 000.00 in year 2001. * Browning’s conservative operation of the business was appealing to a number of trade creditors. * No sales representatives were employed, orders were taken over the telephone or by customers visiting the business. Negative issues are: * The company experienced a cash flow problem. * A need existed to increase borrowing from R 1 730 000.00 to R 3 250 000.00. * In order to fund the promissory note issued to Mr Stark, the business land and buildings were mortgaged for R 500 000.00. * Quantity discounts and credit terms of net 30 days were usually offered to customers who comprised of electrical contractors, small builders, handymen and members of the public. * Mr Browning possessed a house that cost R 500 000.00 to build and was mortgaged at R 270 000.00. QUESTIONS A. Explain (quoting...
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...Raising Finance- Liability Key Terminology: Incorporated This is when the entrepreneur and the business are a separate legal entity. * The business is responsible for any debts incurred. Limited Liability This is when only the business is liable for any debts to be paid back that it has incurred. * Only what the business owns can be used to pay back and debts incurred. Owners personal possessions cannot be touched. Limited sources are incorporated; bot h LTD and PLC Unincorporated This is when the entrepreneur and the business are from the same legal entity. * He/she is responsible for it and any debts it incurs. Unlimited Liability This is when the entrepreneur is liable for the debts to be paid back that the business had incurred. * Even if it means selling everything the business has and all his/her personal possessions in order to pay back. Sole traders and Partnerships are usually unincorporated Limited Liability and Finance An investor’s liability/financial commitment is limited to the total amount they have invested (share capital) into the business. An investor’s personal savings outside the investment e.g. house, car- is protected * Very risky for a bank to lend money to individuals/businesses with limited liability because their personal belongings and savings are protected and cannot be used to pay back the debt- so if the business goes bust the bank will likely lose out. Unlimited Liability and Finance The owners of a business...
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...COMMENTARY ON CFPB REPORT: DATA POINT: CHECKING ACCOUNT OVERDRAFT G. Michael Flores, Bretton Woods, Inc. Todd J. Zywicki, George Mason University School of Law George Mason University Law and Economics Research Paper Series 14-45 This paper is available on the Social Science Research Network at http://ssrn.com/abstract=2499716 Commentary: CFPB Report Data Point: Checking Account Overdraft September 2014 G. Michael Flores and Todd J. Zywicki About the Authors G. Michael Flores is CEO of Bretton Woods, Inc. (www.bretton-woods.com) and is a researcher and business adviser who has studied financial services companies and consumer credit in general for over 30 years, with a particular focus on “alternative” credit programs for the last 10 years. Since 1995 he has been actively involved in advising banks seeking to establish their overdraft programs. He has written and published research papers on consumer credit in the United States and the United Kingdom, as well as papers on payments, including general-purpose reloadable and payroll prepaid cards. Based on these studies, he has testified before several House and Senate subcommittees and spoken to industry groups. He has also authored articles for industry publications. He is a faculty member with Pacific Coast Banking School at the University of Washington in Seattle. Todd J. Zywicki is George Mason University Foundation Professor of Law and a senior scholar with the Mercatus Center at George Mason...
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...Company (C.C.C) Outcome DJ42-34 CCCCC The managing director of C.C.C had asked me to answer the following 7 questions relating to customer care/ focus and aftercare. To understand what excellent customer care and the impact of both positive and negative experiences can have on a customer, we must firstly understand what a customer is and secondly what Customer Care is. A customer can either be an individual or a business, on a daily basis we interact with customers both internally and externally. Each customer will have a unique set of requirements and needs. For external customers this could be to have bank accounts to save money in, ability to pay bills (Direct debits etc), buy/sell shares, create pension plans or use credit facilities. All these products are something that C.C.C can offer. Internal customers are colleagues and departments within the organisation and have a variety of internal needs dependant on their role within the organisation. What is customer care? Good customer care requires an organisation to recognise who the customer is and what their requirements are, having the ability to deal with customers effectively regardless. In a competitive environment where the product is readily available it could be argued that an organisation is dependent on their customer care strategy setting themselves from the competition. Customer care does not just lie with these external customers the effective working relationships between departments also can...
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...12 of 19 Mystery of-disappearing-oil 4,783 views * Share * Like * Download Cik Liana Omar Follow 1 6 0 Published on Dec 2, 2014 maf680 ... Published in: Education ------------------------------------------------- 0 Comments ------------------------------------------------- 4 Likes ------------------------------------------------- Statistics ------------------------------------------------- Notes ------------------------------------------------- Top of Form Post Bottom of Form * Be the first to comment Mystery of-disappearing-oil 1. 1. In our opinion we think that the possibility of Jamel short-changinng is high. We have indentified the fraud symptoms as below: 1. Unusual behaviour - Jamel’s body language Unusual behaviour is seen through an individual's recognizable behaviour pattern to attempt to cope with the stress. The guilty leads to fear; fear leads to stress; and stress leads to behaviour changes. Research in psychology reveals that when a person, especially a first-time offender, commits a crime, he or she becomes engulfed by emotions of fear and guilt. Those emotions cause the individual to experience a significant amount of stress, and in order to cope with the stress, the individual will exhibit unusual and recognizable behaviour patterns. In this case, Jamel’s behaviour is very suspicious. First, body language such as the facial expressions and body posture can show people emotion and thinking especially...
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...than a small fruit and vegetable supplier. 3. Administrative savings can arise when large firms spread their administrative and management costs across all their plants, departments, divisions, or subsidiaries. For example, a large multi-national can employ one set of financial accountants for all its separate businesses. 4. Large firms can gain financial savings because they can usually borrow money more cheaply than small firms. This is because they usually have more valuable assets which can be used as security (collateral), and are seen to be a lower risk, especially in comparison with new businesses. In fact, many new businesses fail within their first few years because of cash-flow inadequacies. For example, for having a bank overdraft facility, a supermarket may be charged 2 or 3 % less than a small independent retailer. 5. Risk bearing economies are often derived by large firms who can bear business risks more effectively than smaller firms. For example, a large record company can more easily bear the risk of a ‘flop’ than a smaller record label. Diseconomies...
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...University of Technology, Jamaica Faculty of Business and Management School of Business Administration Post Graduate Division SUBMISSION DATE: July 24, 2010 Service Encounter themes with San Flora Express Recovery Satisfactory I ordered a bouquet from San Flora Express and paid for same day service but the wrong bouquet was delivered a day later. The customer service manager called back to apologize and advise me about the delay and sent a gift basket on the delivery day, sent an upgrade to the floral arrangement the following day and this was done without any additional charges. Dissatisfactory The customer service representative informed me that there was nothing they could do about delivering my bouquet on-time and told me that late or next day delivery was a consequence of placing an order on a public holiday. This was not explained when I was making the ordering and payment. She furthered informed me that the order was non-refundable. Adaptability Satisfactory My cousin went into labour a week and a half before the expected time. The policy at San Flora Express states that orders placed after mid-day will be delivered on the following day. However, the receptionist said there were not much delivery to go out that afternoon and made an exception in my case to have the bouquet delivered that evening. Dissatisfactory I know that my cousin is allergic to Daffodils and Chrysanthemums so I asked San Flora Express to inform me of the types of flowers...
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...The amount is in the nature of loan and refers to the sum paid to the borrower. Thus from the view point of borrower, it is ‘borrowing’ and from the view point of bank, it is ‘lending’. Loan may be regarded as ‘credit’ granted where the money is disbursed and its recovery is made on a later date. It is a debt for the borrower. While granting loans, credit is given for a definite purpose and for a predetermined period. Interest is charged on the loan at agreed rate and intervals of payment. ‘Advance’ on the other hand, is a ‘credit facility’ granted by the bank. Banks grant advances largely for short-term purposes, such as purchase of goods traded in and meeting other short-term trading liabilities. There is a sense of debt in loan, whereas an advance is a facility being availed of by the borrower. However, like loans, advances are also to be repaid. Thus a credit facility-repayable in installments over a period is termed as loan while a credit facility repayable within one year may be known as advances Merits of Granting Loans and Advances Loans and...
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...Strategies for Managing Surplus funds * Keith v Smith says the financial manager can consider a series of seven strategies for handling the excess cash balance with the firm: * 1. Do nothing : the financial manager simply allows surplus liquidity to accumulate in the current account. * This strategy enhances liquidity at the expense of profits that could be earned from investing in surplus funds. * 2. Make an adhoc investment: the FM makes investments in some what adhoc manner . * Such a strategy makes some contribution, though not optimal contribution to profitability with out impairing the liquidity of the firm. * It is followed by the firms which cannot devote enough time and resources to management of securities. * 3. Ride on yield curve: this is a strategy to increase the yield from a portfolio of marketable securities by betting on the interest rate changes. * If the financial manager expects that interest rates will fall in the near future, he would buy longer term securities as they appreciate more, compared to shorter term securities. * On the other hand , if the FM believes that the interest rates will rise in the near future, he would sell longer term securities. This strategy hinges on the assumption that the FM has superior interest rate forecasting ability. * Empherical evidence, however suggests that it may be futile to try to do better than average. The expected higher return is almost invariably accompanied by higher...
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...In our opinion we think that the possibility of Jamel short-changinng is high. We have indentified the fraud symptoms as below: 1. Unusual behaviour - Jamel’s body language Unusual behaviour is seen through an individual's recognizable behaviour pattern to attempt to cope with the stress. The guilty leads to fear; fear leads to stress; and stress leads to behaviour changes. Research in psychology reveals that when a person, especially a first-time offender, commits a crime, he or she becomes engulfed by emotions of fear and guilt. Those emotions cause the individual to experience a significant amount of stress, and in order to cope with the stress, the individual will exhibit unusual and recognizable behaviour patterns. In this case, Jamel’s behaviour is very suspicious. First, body language such as the facial expressions and body posture can show people emotion and thinking especially when someone is trying to lying to another. In the meeting between Jamel and Mat Jon, Jamel’s reaction and expressions make him to be suspicious that he is doing something wrong and trying intentionally to cover it up from others knowing, especially his Pak Long, Mat Jon. We can see that Jamel looked very worry and nervous. He even trying hard to look confident, in order to not want his uncle to be monitoring the business closely and do not want his uncle to know what exactly happen in the business. Moreover, when Mat Jon question to Jamel the problem that he found in the business...
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...Discuss ways in which the company might reduce the bank overdraft as required by the bank. Firesafe Ltd. should constantly make efforts to reduce their overdraft as the bank requires them to do so. In the current economic climate banks are being more careful of the money loaned. Banks are currently trying to convert business overdrafts to loans. “Many business banking overdraft facilities are being removed or refused and others converted to term loans by business banking managers” (http://whichcommercialfinance.co.uk). This is beneficial for banks but can affect the way in which a business’ finance is managed. For Firesafe Ltd, it can have serious implications. Loans are legally binding, meaning that they have to pay the loan back within the agreed time frame. This affects the business because if they do not pay off the loan, they can build up interest, and potentially threaten the business. This would increase costs and therefore decrease the chances of Firesafe Ltd to break even or make profit, resulting in bankruptcy. A loan is very different from an overdraft; an overdraft is extremely flexible. A loan is a large fixed sum of money that carries high interest. This means that Firesafe Ltd. would have to change the way it operates and try to increase sales and cut down all unnecessary spending in order to pay back the loan. The main implication of a business overdraft being converted into a loan is that the bank then has control within the firm. For example, Firesafe Ltd...
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...Unit 2 Title: Managing Financial Resources and Decisions Assignment: P1-P13 Assignments Deadline: 27th February 2012 Submission Date: 27th February 2012 Submitted By: Maisam Bokhari Student ID: 40013660 P1 (a) (McLaney and Atrill: 2010) suggest that finance is concerned with the way in which funds for a business are raised and invested. Any business irrespective of its size and nature requires sources to raise finance. Different types of sources of finance are available to different types of businesses. Broadly the two types of sources of finance are internal and external. Internal sources are from within the business and external sources are outsourced extrinsically. The three main legal statuses of business constitute of being a sole trader or partnerships and Private Limited Company. Sources of finance available to each of these are discussed below. Sole Trader and Partnership: Sole traders and partnerships refer to the simplest forms of business organization. A sole trader is an individual who runs a business from his own name, providing all the capital and assuming all the risks. A partnership can include more than one individual. Sole trader and partnerships have a range of options to get finance. Personal Savings and Loans * Put simply, personal savings is the amount of money a person has at his disposal. It becomes a source of finance when the sole trader or a partnership member is willing to invest it in his business. It is up for the individual...
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...We have heard a lot from bankers, but perhaps the most revealing comment at Wednesday's business, innovation and skills select committee was made by Vince Cable on the subject of bank lending, and what would happen if the Project Merlin targets are missed. The business secretary, as expected, issued vague threats about higher taxes. But then he added: "It is hard to imagine that we could penalise individual banks." Why? The Merlin agreement set a collective target for gross business lending by the big five banks (£190bn in total and £76bn to small and medium-sized companies) but it was always possible that some would pull their weight and some would not. So surely there ought to be a way to apply a whip to the laggards. But there is not. Nor, it appears, has the government nailed down the detail of the only sanction that was trumpeted by the chancellor at the time of February's agreement – a link between executive bonuses and lending targets. Cable is only now writing to banks' remuneration committees to ask how they intend to apply the principle. Merlin, as we suspected, was a badly drafted fudge. But, if the targets are missed, get ready for a repeat. The government will threaten higher taxes. The banks will protest that demand for lending is weak (and Bob Diamond got his retaliation in early when he said small businesses have £16bn on deposit at Barclays). Companies themselves will complain that the price of credit is too high. In the end, an equally unsatisfactory Merlin...
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...MYSTERY OF DISAPPEARING OIL In our opinion we think that the possibility of Jamel short-changinng is high. We have indentified the fraud symptoms as below: 1. Unusual behaviour - Jamel’s body language Unusual behaviour is seen through an individual's recognizable behaviour pattern to attempt to cope with the stress. The guilty leads to fear; fear leads to stress; and stress leads to behaviour changes. Research in psychology reveals that when a person, especially a first-time offender, commits a crime, he or she becomes engulfed by emotions of fear and guilt. Those emotions cause the individual to experience a significant amount of stress, and in order to cope with the stress, the individual will exhibit unusual and recognizable behaviour patterns. In this case, Jamel’s behaviour is very suspicious. First, body language such as the facial expressions and body posture can show people emotion and thinking especially when someone is trying to lying to another. In the meeting between Jamel and Mat Jon, Jamel’s reaction and expressions make him to be suspicious that he is doing something wrong and trying intentionally to cover it up from others knowing, especially his Pak Long, Mat Jon. We can see that Jamel looked very worry and nervous. He even trying hard to look confident, in order to not want his uncle to be monitoring the business closely and do not want his uncle to know what exactly happen in the business. Moreover, when Mat Jon question to Jamel the problem that...
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