Public Deposits Public deposits refer to unsecured deposits raised by companies from the public, primarily to finance their working capital requirements. These deposits serve as a short-term financing option for companies. In India, companies are subject to strict regulatory limits regarding public deposits. A company can accept deposits from the public up to a maximum…
Accruals are a method of accounting that records transactions when they occur, while trade credit is a financial arrangement that allows a buyer to purchase goods or services without paying immediately. Accruals Accrual accounting is an accounting method that records revenues and expenses before payments are received or issued. In other words, it records revenue…
The primary objective of working capital management is to ensure the efficient management of current assets, including cash, raw materials, work-in-process, finished goods, and receivables. Achieving this involves determining the optimal investment level in each component to support smooth business operations and financial health. The Role of Cash in Working Capital Management Cash is the…
A lease is a contract that outlines the terms under which one party agrees to rent an asset. This asset could include real estate, vehicles, equipment, or other types of property. The lessor is the party who owns the asset and provides the right to use it, while the lessee is the party who uses…
Meaning of Lease: A lease is a contract that outlines the terms under which one party agrees to rent an asset. The leased asset could include real estate, vehicles, equipment, or other types of property. The lessor is the person who owns the asset and provides the right to use it to a third party,…
Leasing of assets is a major financing decision because it allows a business to access and utilize an asset without having to purchase it outright, essentially “renting” the asset by making periodic payments to the owner (lessor) instead of taking on the upfront capital cost, thus impacting the company’s capital structure and overall financial strategy;…
A recommendation in a project report is a suggestion or advice for a specific action or decision. The purpose of a recommendation report is to compare options and recommend the best one for solving a problem or filling a need. The credit officer of a bank would consider all the information provided by you in…
The Cash flow statement represents the increased or decreased position of cash and cash equivalents in a business Cash flow methods for Investment Appraisal can be broadly categorised into discounted cash flow and non-discounted techniques. In investment appraisal, “discounted cash flow” methods consider the time value of money by discounting future cash flows to their…
Trade Credits (TC) denote the credits extended by the overseas supplier, bank, financial institution and other permitted recognised lenders for maturity, for imports of capital/non-capital goods permissible under the Foreign Trade Policy of the Government of India. Depending on the source of finance, such TCs include suppliers’ credit and buyers’ credit from recognised lenders. The…
Common misconceptions about the cost of capital include believing it is solely the cost of equity, considering it a desired return rather than a required return, thinking it is a fixed number for a company, assuming retained earnings are “free,” and not factoring in the weighted average of different capital sources when calculating it (such…
