Public Deposits and Inter-Corporate Deposits
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…
Read articleMeaning of Accruals and Trade Credit in Working Capital
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…
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Role of Cash and Marketable Securities in Working Capital Management
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…
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Understanding a Lease Agreement and Legal Aspects of Leasing
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…
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Accounting of Lease Transactions in the Books of Lessor and Lessee
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,…
The Rationale and Financial Decision behind Leasing
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;…
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