ADMS 3530 Chapter Notes - Chapter 20: Accounts Receivable, Cost Overrun, Asset-Backed Commercial Paper

• School: York University
• Department: Administrative Studies
• Course: ADMS 3530
• Professor: Alagurajah

Document Summary

If long term does not cover short term financing make up difference. Matching maturities: match maturities for fi(cid:396)(cid:373)"s assets & lia(cid:271)ilities finance long lived assets with long term borrowing & equity / short term assets financed. With short term bank loans/debt: 2. Permanent working capital requirements: most firms have permanent investment in net working capital (current asset less current liability) plan to have positive amount of net working capital at all times financed from long term sources, 3. If firm wants sure ability to borrow enter revolving credit agreement commit bank to lending up to agreed limit. In return firm pay commitment fee ex. Inventory financing: banks need to monitor companies (cid:373)ake su(cid:396)e they do(cid:374)"t sell assets & run away. Lenders i(cid:374)sist o(cid:374) (cid:862)field (cid:449)a(cid:396)ehousi(cid:374)g(cid:863) independent warehouse company hired by bank supervises inventory pledged: as firm pays back warehouse releases back inventory to firm.