BUS 082 Lecture Notes - Lecture 19: Commercial Paper, Dividend Policy, Trade Credit

• School: College of The Sequoias
• Department: Business (BUS)
• Course: BUS 082
• Professor: gradin

Document Summary

Dividends are periodic cash payments to shareholders. Financial managers must make decisions regarding their dividend policy. Trade credit is extended by suppliers when a firm receives goods or services. The firm agrees to pay for them at a later date. Short-term loans are a significant source of short-term financing for many businesses. Loans can be used to finance inventory and accounts receivable. Commercial paper is a short-term iou sold by a company. Commercial paper is typically sold in multiples of ,000 to million. They usually have a maturity that ranges from 1 270 days. Although commercial paper is an attractive short-term financing option, only a small percentage of businesses can issue it. Access to the commercial paper market has traditionally been limited to large, financially strong corporations. Financial managers evaluate mergers, acquisitions, and other opportunities by comparing costs and benefits. A merger is a transaction when two firms combine.