Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Q. Explain about Invoice discounting?
Invoice discounting is a technique which is able to be used to raise finance against receivables.
Invoice discounting works as follows: A company issues an invoice to a customer as well as sends a copy invoice to the discount company which then makes a payment against the invoice and takes responsibility for collecting the debt from the customer. The amount of the payment will differ but is very rarely 100% of the invoice value. The balance of money unpaid is paid across to the selling company when the discount company has received full payment for the customer.
The arrangement has the effect of permitting the selling company to collect its debts in early so reducing the working capital requirement of the business and improving the cash flow.
The price that is paid for the service is typically set at a fixed percentage monthly rate for example 1% of the value of invoices discounted. Although the process operates "with recourse", companies will frequently find that they are only able to discount the invoices of customers with high credit ratings who are therefore reliable receivables. This means that not all invoices are able to be funded and the risk of bad debts remains. The extent to which companies may find that using invoice discounting does improve the cash flow is thus dependent upon the credit profile of customers and their bad debt record. The discounting is mainly advantageous (in cash flow terms) for companies which are selling to customers with high credit ratings and a good payment record.
Eco Tyre Ltd. (ETL) - incorporated in year 2003 and entered into automobile tyre manufacturing business by introducing a new tire manufacturing technology. Over the years, ETL has
Explain and compare the costs of hedging via the forward contract and the options contract. Answer: There is no up-front cost of hedging through forward contracts. Though, in t
Q. What do you know about sinking funds? sinking funds : quite often, one may be interested to accumulate a target amount over a given period inclusive of interest for the peri
What were the main objectives of the Bretton Woods system? Answer: The major objectives of the Bretton Woods system are to acquire exchange rate stability and promote internation
Operating segments An operating segment is a component of an organisation It engages in business activities from that it can earn revenues and incur expenses(this also c
Leveraged Buyout (LBO) Acquisition of an organization through the accumulation of 70 % or more of the organizations total capitalized debt.
Question: (a) Describe the Interest Rate Parity Theory. (b) A company needs to pay in 3 months USD 1 million. The USD are already at disposal in the company, thus the c
Question: Explain: (a) the advantages and disadvantages, to a company, of debt finance over equity finance; (b) the reasons why a company may choose to issue preference s
What problems can take place into the capital budgeting analysis if project debt is evaluated in place of the borrowing capacity created by the project? If project debt is grea
BURLEY PLC Financial desirability In a real-terms analysis the real rate of return necessary by shareholders has to be used. This is found as follows 1 nominal rate/1 i
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd