MGTA02H3 Chapter Notes - Chapter 10: High-Yield Debt

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16 Dec 2010
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MGTA02H3 Full Course Notes
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N work-in-process inventory that portion of a firm"s inventory consisting of goods partway though the production process. N working capital is difference between current assets and current liabilities; it is liquid asset out of which current debts can be paid. N moreover, they generally carry lower interest rates than unsecured loans. N most short-term business borrowing is secured by inventories and accounts receivable. N when a loan is made with inventory as collateral, the lender loans the borrower some portion of the stated value of the inventory. N inventory is more attractive as collateral when it provided the lender with real security for the loan amount: if the inventory can be readily converted into cash, it is relatively more valuable as collateral. N most corporations get their long-term loans from a chartered bank, usually ones with which the firm has developed a relationship.

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