Textbook Notes #6 - sept 27.docx

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Business Administration
Course Code
Business Administration 1220E

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Nicole Wallenburg Business 1220 September 27 2011 Business 1220Textbook NotesSources and Types of FinancingThe cost availability and conditions must be analyzed for each source in order to obtain the right fit for the firm Financing Sources are usually categorized as either shortterm or longtermShort Term FinancingEnterprises can obtain shortterm financing from trade creditors chartered banks factor companies and the shortterm money marketIt is usually for a period of less than one yearTrade credit refers to purchasing goods or services from suppliers on credito It appears on the balance sheet as accounts payable o The buyer is allowed a period of time usually 30 or 60 days in which to pay for the goods or services received o To encourage prompt payments of credit sales sellers frequently offer a discount from the invoiced amount if total payment is made within 10 days of billing o If it is not paid off in time the creditor will charge an interest penaltyThe Canadian chartered banks are another important source of shortterm financingo Demand loans with a kind of credit are the most common type of credit given by banks o A line of credit means the bank can arrange for an individual or a company to borrow up
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