短筹资().PPT

,Short-TermFinancing,Short-TermFinancing,SpontaneousFinancingNegotiatedFinancingFactoringAccountsReceivableCompositionofShort-TermFinancing,SpontaneousFinancing,AccountsPayable(TradeCreditfromSuppliers)AccruedExpenses,Typesofspontaneousfinancing,SpontaneousFinancing,OpenAccounts:thesellershipsgoodstothebuyerwithaninvoicespecifyinggoodsshipped,totalamountdue,andtermsofthesale.NotesPayable:thebuyersignsanotethatevidencesadebttotheseller.,TradeCredit-creditgrantedfromonebusinesstoanother.Examplesoftradecreditare:,SpontaneousFinancing,Draft-Asigned,writtenorderbywhichthefirstparty(drawer)instructsasecondparty(drawee)topayaspecifiedamountofmoneytoathirdparty(payee).Thedrawerandpayeeareoftenoneandthesame.,TradeAcceptances:thesellerdrawsadraftonthebuyerthatordersthebuyertopaythedraftatsomefuturetimeperiod.,TermsoftheSale,NetPeriod-NoCashDiscount-whencreditisextended,thesellerspecifiestheperiodoftimeallowedforpayment.“Net30”impliesfullpaymentin30daysfromtheinvoicedate.,CODandCBD-NoTradeCredit:thebuyerpayscashondeliveryorcashbeforedelivery.ThisreducesthesellersriskunderCODtothebuyerrefusingtheshipmentoreliminatesitcompletelyforCBD.,TermsoftheSale,SeasonalDating-credittermsthatencouragethebuyerofseasonalproductstotakedeliverybeforethepeaksalesperiodandtodeferpaymentuntilafterthepeaksalesperiod.,NetPeriod-CashDiscount-whencreditisextended,thesellerspecifiestheperiodoftimeallowedforpaymentandoffersacashdiscountifpaidintheearlypartoftheperiod.“2/10,net30”impliesfullpaymentwithin30daysfromtheinvoicedatelessa2%discountifpaidwithin10days.,TradeCreditasaMeansofFinancing,$1,000 x30days=$30,000accountbalance,Whathappenstoaccountspayableifafirmpurchases$1,000/dayat“net30”?,Whathappenstoaccountspayableifafirmpurchases$1,500/dayat“net30”?,$1,500 x30days=$45,000accountbalanceA$15,000increasefromoperations!,CosttoForgoaDiscount,Approximateannualinterestcost=%discount365days(100%-%discount)(paymentdate-discountperiod),Whatistheapproximateannualcosttoforgothecashdiscountof“2/10,net30”afterthefirsttendays?,X,CosttoForgoaDiscount,Approximateannualinterestcost=2%365days(100%-2%)(30days-10days)=(2/98)x(365/20)=37.2%,Whatistheapproximateannualcosttoforgothecashdiscountof“2/10,net30,”andpayattheendofthecreditperiod?,X,PaymentDate*Annualrateofinterest11744.9%2074.53037.26014.9909.3*daysfrominvoicedate,CosttoForgoaDiscount,Theapproximateinterestcostoveravarietyofpaymentdecisionsfor“2/10,net_.”,S-t-r-e-t-c-h-i-n-gAccountPayables,Costofthecashdiscount(ifany)forgoneLatepaymentpenaltiesorinterestDeteriorationincreditrating,Postponingpaymentbeyondtheendofthenetperiodisknownas“stretchingaccountspayable”or“leaningonthetrade.”Possiblecostsof“stretchingaccountspayable”,AdvantagesofTradeCredit,ConvenienceandavailabilityoftradecreditGreaterflexibilityasameansoffinancing,Comparecostsofforgoingapossiblecashdiscountagainsttheadvantagesoftradecredit.,WhoBearstheCostofFundsforTradeCredit?,Buyers-whencostscanbefullypassedonthroughhigherpricestothebuyerbytheseller.Both-whencostscanpartiallybepassedontobuyersbysellers.,Suppliers-whentradecostscannotbepassedontobuyersbecauseofpricecompetitionanddemand.,AccruedExpenses,Wages-Benefitsaccruevianodirectcashcosts,butcostscandevelopbyreducedemployeemoraleandefficiency.Taxes-Benefitsaccrueuntiltheduedate,butcostsofpenaltiesandinterestbeyondtheduedatereducethebenefits.,AccruedExpenses-Amountsowedbutnotyetpaidforwages,taxes,interest,anddividends.Theaccruedexpensesaccountisashort-termliability.,SpontaneousFinancing,MoneyMarketCreditCommercialPaperBankersAcceptancesUnsecuredLoansLineofCreditRevolvingCreditAgreementTransactionLoan,Typesofnegotiatedfinancing:,“Stand-Alone”CommercialPaper,Commercialpapermarketiscomposedofthe(1)dealerand(2)direct-placementmarkets.Advantage:Cheaperthanashort-termbusinessloanfromacommercialbank.Dealersrequirealineofcredittoensurethatthecommercialpaperispaidoff.,CommercialPaper-Short-term,unsecuredpromissorynotes,generallyissuedbylargecorporations(unsecuredcorporateIOUs).,“Bank-Supported”CommercialPaper,Letterofcredit(L/C)-Apromisefromathirdparty(usuallyabank)forpaymentintheeventthatcertainconditionsaremet.Itisfrequentlyusedtoguaranteepaymentofanobligation.Bestforlesser-knownfirmstoaccesslowercostfunds.,Abankprovidesaletterofcredit,forafee,guaranteeingtheinvestorthatthecompanysobligationwillbepaid.,BankersAcceptances,Usedtofacilitateforeigntradeortheshipmentofcertainmarketablegoods.Liquidmarketprovidesratessimilartocommercialpaperrates.,BankersAcceptances-Short-termpromissorytradenotesforwhichabank(byhaving“accepted”them)promisestopaytheholderthefaceamountatmaturity.,Short-TermBusinessLoans,SecuredLoans-Aformofdebtformoneyborrowedinwhichspecificassetshavebeenpledgedtoguaranteepayment.,UnsecuredLoans-Aformofdebtformoneyborrowedthatisnotbackedbythepledgeofspecificassets.,UnsecuredLoans,One-yearlimitthatisreviewedpriortorenewaltodetermineifconditionsnecessitateachange.Creditlineisbasedonthebanksassessmentofthecreditworthinessandcreditneedsofthefirm.“Cleanup”provisionrequiresthefirmtoowethebanknothingforaperiodoftime.,LineofCredit(withabank)-Aninformalarrangementbetweenabankanditscustomerspecifyingthemaximumamountofunsecuredcreditthebankwillpermitthefirmtooweatanyonetime.,UnsecuredLoans,Firmreceivesrevolvingcreditbypayingacommitmentfeeonanyunusedportionofthemaximumamountofcredit.Commitmentfee-Afeechargedbythelenderforagreeingtoholdcreditavailable.Agreementsfrequentlyextendbeyond1year.,RevolvingCreditAgreement-Aformal,legalcommitmenttoextendcredituptosomemaximumamountoverastatedperiodoftime.,UnsecuredLoans,Eachrequestishandledasaseparatetransactionbythebank,andprojectloandeterminationisbasedonthecash-flowabilityoftheborrower.Theloanispaidoffatthecompletionoftheprojectbythefirmfromresultingcashflows.,TransactionLoan-Aloanagreementthatmeetstheshort-termfundsneedsofthefirmforasingle,specificpurpose.,Detour:CostofBorrowing,Differentialfromprimedependson:CashbalancesOtherbusinesswiththebankCostofservicingtheloan,InterestRatesPrimeRate-Short-terminterestratechargedbybankstolarge,creditworthycustomers.,$10,000ininterest$100,000inusablefunds,Detour:CostofBorrowing,ComputingInterestRatesCollectBasis-interestispaidatmaturityofthenote.Example:$100,000loanat10%statedinterestratefor1year.,=10.00%,$10,000ininterest$90,000inusablefunds,Detour:CostofBorrowing,ComputingInterestRatesDiscountBasis-interestisdeductedfromtheinitialloan.Example:$100,000loanat10%statedinterestratefor1year.,=11.11%,$100,000ininterest$850,000inusablefunds,Detour:CostofBorrowing,CompensatingBalancesNon-interest-bearingdemanddepositsmaintainedbyafirmtocompensateabankforservicesprovided,creditlines,orloans.Example:$1,000,000loanat10%statedinterestratefor1yearwitharequired$150,000compensatingbalance.,=11.76%,Detour:CostofBorrowing,CommitmentFeesThefeechargedbythelenderforagreeingtoholdcreditavailableisontheunusedportionsofcredit.Example:$1millionrevolvingcreditat10%statedinterestratefor1year;borrowingfortheyearwas$600,000;arequired5%compensatingbalanceonborrowedfunds;anda.5%commitmentfeeon$400,000ofunusedcredit.Whatisthecostofborrowing?,$60,000ininterest+$2,000incommitmentfees$570,000inusablefunds,Detour:CostofBorrowing,Interest:($600,000)x(10%)=$60,000CommitmentFee:($400,000)x(0.5%)=$2,000CompensatingBalance:($600,000)x(5%)=$30,000UsableFunds:$600,000-$30,000=$570,000,=10.88%,Secured(orAsset-Based)Loans,MarketabilityLifeRiskiness,Security(collateral)-Asset(s)pledgedbyaborrowertoensurerepaymentofaloan.Iftheborrowerdefaults,thelendermaysellthesecuritytopayofftheloan.Collateralvaluedependson:,UniformCommercialCode,SecurityinterestsofthelenderSecurityagreement(device)Filingofthesecurityagreement,ModelstatelegislationrelatedtomanyaspectsofcommercialtransactionsthatwentintoeffectinPennsylvaniain1954.Ithasbeenadoptedwithlimitedchangesbymoststatelegislatures.Article9oftheCodedealswith:,Accounts-Receivable-BackedLoans,Quality:notallindividualaccountshavetobeaccepted(mayrejectonaging).Size:smallaccountsmayberejectedasbeingtoocostly(perdollarofloan)tohandlebytheinstitution.,Oneofthemostliquidassetaccounts.Loansbycommercialbanksorfinancecompanies(banksofferlowerinterestrates).Loanevaluationsaremadeon:,Accounts-Receivable-BackedLoans,Notification-firmcustomersarenotifiedthattheiraccountshavebeenpledgedtothelenderandremittancesaremadedirectlytothelendinginstitution.,Typesofreceivableloanarrangements:Nonnotification-firmcustomersarenotnotifiedthattheiraccountshavebeenpledgedtothelender.Thefirmforwardsallpaymentsfrompledgedaccountstothelender.,Inventory-BackedLoans,MarketabilityPerishabilityPricestabilityDifficultyandexpenseofsellingforloansatisfactionCash-flowability,RelativelyliquidassetaccountsLoanevaluationsaremadeon:,TypesofInventory-BackedLoans,FloatingLien-Ageneral,orblanket,lienagainstagroupofassets,suchasinventoryorreceivables,withouttheassetsbeingspecificallyidentified.,ChattelMortgage-Alienonspecificallyidentifiedpersonalproperty(assetsotherthanrealestate)backingaloan.,TypesofInventory-BackedLoans,TrustReceipt-Asecuritydeviceacknowledgingthattheborrowerholdsspecificallyidentifiedinventoryandproceedsfromitssaleintrustforthelender.,TerminalWarehouseReceipt-Areceiptforthedepositofgoodsinapublicwarehousethatalenderholdsascollateralforaloan.,TypesofInventory-BackedLoans,FieldWarehouseReceipt-Areceiptforgoodssegr