Characteristics Of The Debt Finance Essay Example Pdf - Free Essay Example

Sample details Pages: 4 Words: 1348 Downloads: 1 Date added: 2017/06/26 Category Finance Essay Type Narrative essay Did you like this example? Debt financing is financing a company by selling the bonds, notes or mortgages held by the business. Basically it is borrowing money to keep your business running. Long term debt financing is typically associated with larger assets such as buildings, equipment, land, and large machinery. The schedule for repayment for long term debt financing expands for more than a year. Short term debt financing is mostly associated with operations of the business such as inventory purchasing, payroll, and supplies. The repayment of short term debt financing happens in less than a year. With debt financing, your business does not have give up future profits or ownership in the company like with equity financing. Debt financing is more commonly known as selling bonds or debentures. Debentures are tools used by large companies to raise capital for their projects and operations. This is known as a debt offering since the company literally goes into debt to the investors until th e price of the debenture is paid back, plus interest, or until it is converted into stock. The company must record this debt in their balance sheet. If bankruptcy occurs, the debenture holders are considered creditors and must be paid back by the companys remaining assets. Debentures are a way for companies to raise capital without having to use their assets or give up ownership in their company. This leaves their assets free to do other things to generate capital for the business. Long term Long term debt financing is done, when the repayment schedule of the loan and the approximated useful life that the purchased assets have is expected to go beyond one year. These assets can be machineries, computers, shelving, land and other such things. The long term loans are usually secured initially up to 65 percent by the purchased assets and then, the remaining 35 percent by the unburdened physical assets. If both these things fail, then the services are availed of guarantors and sha reholders. Characteristics of the Long Term Loans of Debt : ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ The principal amount is repaid over a time period that is in direct relation to the utilitarian life of assets such as buildings and land up to 30 years and computers for 3 years. ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ The long term loan of debt carries the repayment provisions of both the principal as well as the interest in a repayment schedule that is preset. The repayment that is done before time is penalty bound, on account of the non-planning of the alternative investments regarding the same by the lenders. ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ The percentage of the interest rate usually remains steady for the entire loan term. Every payment of the original amount reduces the balance in it and subsequently, the interest is computed on the reducing balance of the amount. The Evaluation and Approach of the Loans : The long term loan evaluation is a very sophisticated and rigorous process, than the evaluation of mortgage loans. The lenders of such loans are in fact evaluating the management teams ability, seeing the situations commercial viability and the collateral security attached for supporting the loan application, as mentioned in the financial submissions. The evaluation of the long term loans requires a plan that is in the format of a bound presentation and provides all the detailed information about the companys management or the project or individuals. The loans concerning the business requires the exact history of it, the production methods of its products, the operations of the business, its market position, the purpose of taking the loan with the intimate details, the securities given for the loan approval and the extensive projections and financial information regarding the business. Most of the people approach the field of money borrowing with some apprehension. In fact, the borrowing of money from financial institutions has not to be view ed as begging. Rather, it has to be viewed as giving an opportunity to the commercial loan institute for doing business. The money is borrowed from the people, who aid in soliciting the business of the individuals taking the loan. Loans are in fact a commodity on the shelves of the retailers. The aspirants of the loans are actually helping the lenders in doing business. Short Term CF Short Term Debt financing usually applies to money needed for the day-to-day operations of the business, such as purchasing inventory, supplies, or paying the wages of employees. Short term financing is referred to as an operating loan or short term loan because scheduled repayment takes place in less than one year. A line of credit is an example of short term debt financing. Commercial Banks and Non Performing Loans Role of Commercial Banks in Extending Loans Loans as Assets for the Commercial Banks Nonperforming Loans A nonperforming loan seems simple enough to understand in theory but is subject to various definitions. Generally speaking, a loan is nonperforming when it is not making income for the lender. According to the Financial Times, the point when a loan is classified as nonperforming by a lender and when it becomes a bad debt depends on local regulations. There is no global standard to define non-performing loans at the practical level. Variations exist in terms of the classification system, the scope, and contents. Such problem potentially adds to disorder and uncertainty in the NPL issues. For example, as described by Se-Hark Park (2003), during 1990s, there were three different methods of defining non-performing loans in Japan: the 1993 method based on banking laws; the Banks Self-Valuation in March 1996; and the Financial Revival Laws-Based Debt Disclosure in 1999. These measurements have gradually broadened the scope and scales of the risk-management method. Similar to the trend in Japan, more countries, regulators, and banks are movin g towards adopting and adapting better and more consensus practices. For example, in the U.S., federal regulated banks are required to use the five-tier non-performing loan classification system according to BIS: Pass, Special Mention, Substandard, Doubtful, and Loss. Presently, the five-tier system is the most popular risk classification method, or, in some cases, a dual system of reporting according to their domestic policy guidelines as well as the five-tier system. According to BIS, the standard loan classifications are defined as follows: (1) Passed: Solvent loans; (2) Special Mention: Loans to enterprises which may pose some collection difficulties, for instance, because of continuing business losses; (3) Substandard: Loans whose interest or principal payments are longer than three months in arrears of lending conditions are eased. The banks make 10% provision for the unsecured portion of the loans classified as substandard; (4) Doubtful: Full liquidation of outsta nding debts appears doubtful and the accounts suggest that there will be a loss, the exact amount of which cannot be determined as yet. Banks make 50% provision for doubtful loans; (5) Virtual Loss and Loss (Unrecoverable): Outstanding debts are regarded as not collectable, usually loans to firms which applied for legal resolution and protection under bankruptcy laws. Banks make 100% provision for loss loans. Non-performing loans comprise the loans in the latter three categories, and are further differentiated according to the degree of collection difficulties. In addition to the standardised system, efforts have been made to improve the classification of loans. For example, more countries are shortening the period when unpaid loans become past due, intending to put loans on lenders timetable sooner and require them to address these loans before losses start to escalate. The International Accounting Standard 39 revised in 2003 focuses on recognition and measurement of finan cial instruments and, most importantly, defines and establishes the measurement and evaluation of impaired loans. As lenders usually make little or no loss provision for impaired loans, they are at risk to be suddenly forced to reclassify such loans as a loss and take a full write-down if the borrowers go bankrupt. The initiation of this standard is to prevent lenders from being caught off-guard. In addition, many global economists, rating agencies, and organisations such as the World Bank and the Asian Development Bank have begun to evaluate the effects of NPLs on GDP growth. They reduce growth estimates to reflect the time and cost of resolving large non-performing loan issues. The Time Limit Assets (Loans) Classification Substandard Doubtful Loss Provisioning Substandard Doubtful Loss Credit Risk Management Don’t waste time! Our writers will create an original "Characteristics Of The Debt Finance Essay Example Pdf" essay for you Create order

A Brief History of France - 858 Words

Historical Perspective The history of France can be divided to Gaul and Roman Conquest, the middle ages, modern time and contemporary era. The oldest traces of human life in what is now France date from approximately 1.8 million years ago. Between 1500 and 500 B.C. The Guals moved into the region before it was known as France. Gaul was conquered by Rome in the second century B.C., which led to the Gauls adopting the Roman language and culture. France derived its modern name from Franks a Germanic tribes that overran the country from the east around 5th century. (A Brief History of France I) In the 9th century, the Treaty of Verdun divided the Kingdom of Francia to three territories; Eastern Francia, Middle Francia and Western Francia which was the precursor to modern France. Before the monarchy was overthrown during the French revolution in 1798, France was ruled with several noble families and was involved with the hundred years’ war against England, Renaissance, reformation and seven years’ war along with Austria against Prussia and England. (A Brief History of France.II) About 10 years after the revolution in 1804 Pope Pius VII crowned Napoleon Bonaparte as emperor of the France. (Table 1) Although he waged several wars and occupied the most of Europe allied armies conquered Paris and exile Napoleon to the island of Elba. However, he escaped from the island and tried to get back on power but he defeated at the Battle of Waterloo. (A Brief History of France I) AfterShow MoreRelatedThe French Revolution And The American Revolution1408 Words   |  6 Pages The French Revolution Salahaldin Bileh History 101 Professor Manley October 7, 2015 Throughout history, there have been many Revolutions. 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Leadership Individual or Management

Question: Discuss about the case study Leadership for Individual or Management. Answer: Introduction: The term leadership refers to the ability of an individual or management of the company in order to make decisions along with inspiring others for performing well in the company. There are many leadership skills, which one should possess to become an effective leader. The thesis statement of the essay is to determine the situational analysis of three individuals in different scenarios along with comparison of two companies. Chief Executive Officer (CEO) is the top executive of a company. A CEO of a company has a varied role for running the company along with problem-solving skills. A CEO of a company is responsible for setting mission and vision, strategic management, formulating policies, and many more. In this scenario, role and leadership of Nick Vincent, CEO of Eagle Boys Pizza has described. Nick Vincent is currently focusing on international expansion of Eagle Boys along with increased number of stores in the domestic market. Fast Food market in Australia is almost saturated. Hence, the company is into international expansion. Nick Vincent follows his strategy of innovation in the company. Vincent has worked with many renowned brands of Australia that has helped in gaining effective leadership skills. It is seen that Vincent follows participative leadership in order to support innovation and formulation of expansion strategies in international markets. Participative leadership adds a new arena of democratic dimension in management of companies (Rossberger Krause, 2015). It includes autocratic decisions while seeking involvement from key persons associated with the particular situation. Strategic placement of new products and focus on customers need and demand clearly exhibits Nicks strong leadership skills in expansion of Eagle Boys in international markets. Excellent self-management skills of Nick and his effective leadership skills are responsible for achieving the goals and objectives set by the company (Benoliel Somech, 2014). Nick by his excellent strategic management has successfully solved issues of international expansion. Sales representation is an aspect that is a common factor in every company involved in any products. In this scenario, the role of a product manager of Redbubble is discussed. Product manager must have innovative ideas along with leadership skills that will enhance him for approval of a product for the company. Redbubble deals with customized print on demand products. Innovation is the base of the company. The product manager of the company has responsibilities and innovative skills, which is required for approval of products and service. It is a kind of sales. Selling can be anything being a product or an idea. In this case, the product manager of Redbubble is selling the idea of his new product to the senior executives. Here leadership skills are essential for controlling the team associated with the product development. Product development manager must possess some skills like flexibility, communication skills, cooperation, etc. for management of the team (Choudhary, Akhtar Zahee r, 2013). Good negotiation skill is the most vital skill that should be present in executives and managers who are associated in selling. Apart from these, a good leadership style must be required for managing the team handled by the manager as well as presenting the whole idea to the senior executives. Transformational leadership is the style of the manager that involves high level of communication among the teams. In this style of leadership, the product manager motivates his subordinates and team members in order to increase the efficiency of the team. The two companies are two popular companies of Australia. Both the companies support leadership practices supporting different leaders. Eagle Boys is a multinational company that operates in fast food market globally (Eagle Boys, 2016). On the other hand, Redbubble is a company that caters customers of a niche market. The company is small in terms of revenue and size than Eagle Boys. Eagle Boys is into selling pizzas to customers whereas Redbubble is selling innovative service especially art works in garments such as t-shirt, hoodies, covers, skirts, scarfs, etc (Redbubble, 2016). The two companies are operating in different sectors hence; their strategies are different from one another. A supervisor in a construction site has to work with a team who are involved in building the sites. Many workers present in a construction site are involved in different works in different parts of a site. Supervisor of a construction site should be multi-tasking in nature so that the communication between the corporate office and the workers should be in coordinated in a right pace. A site manager has many responsibilities along with coordinating the team at the site. A supervisor is considered as the leader of a construction site. Leadership skills like flexibility, strong decision making skills, problem-solving skills, delegation of work, etc. Problem solving skills of a supervisor in the site is necessary for solving the queries of the workers in the site (Rast III, Hogg Giessner, 2013). In this case, the supervisor has to follow autocratic leadership style for getting the work done within stipulated time. Autocratic leadership is the best form of leadership in this scenario as the team of a site consists of many members that need a strict control. In this type of leadership, the leader is solely responsible for taking all decisions regarding the workers and other works of the site. It is the duty of the site- manager or supervisor to keep updated about every working details of the site. The management style of an autocratic leader is different from that of other leaders following different leadership styles (Oke, 2013). Construction site supervisors have to maintain an alignment of the work with their seniors as well as with the subordinates (Roueche, Baker III Rose, 2014). If a situation arises in a site regarding the safety of the workers, then the supervisor of the site must take safety measures as per requirement of the situation. The essay discusses three different scenarios of leaders of different areas. Three different types of leadership styles along with the behavior of the leaders are described in the essay. It also successfully fosters the thesis statement mentioned above. Hence, it can be concluded that, leadership plays a very important role that not only involves in enhanced productivity but also helps in maintaining good relations among the employees. References Benoliel, P., Somech, A. (2014). The health and performance effects of participative leadership: Exploring the moderating role of the Big Five personality dimensions.European Journal of Work and Organizational Psychology,23(2), 277-294. Choudhary, A. I., Akhtar, S. A., Zaheer, A. (2013). Impact of transformational and servant leadership on organizational performance: A comparative analysis.Journal of Business Ethics,116(2), 433-440. Eagle Boys. (2016). Eagle Boys. Retrieved from: https://www.eagleboys.com.au/ Oke, A. E. (2013). Project Management Leadership Styles of Nigerian Construction Professionals.International Journal of Construction Project Management,5(2), 159. Rast III, D. E., Hogg, M. A., Giessner, S. R. (2013). Self-uncertainty and support for autocratic leadership.Self and Identity,12(6), 635-649. Redbubble. (2016). This is redbubble. Retrieved from: https://www.redbubble.com/about Rossberger, R. J., Krause, D. E. (2015). Participative and Team-Oriented Leadership Styles, Countries Education Level, and National Innovation The Mediating Role of Economic Factors and National Cultural Practices.Cross-Cultural Research,49(1), 20-56. Roueche, P. E., Baker III, G. A., Rose, R. R. (2014).Shared vision: Transformational leadership in American community colleges. Lanham: Rowman Littlefield.

There Is One Part Of My Life That No One Knows About. This Secret Has

There is one part of my life that no one knows about. This secret has caused me to act in ways I thought I wasn't capable of doing. For the past five years, I have been a keeper of this secret, with no intentions to let go of it. I have purposely lied to my loved ones, for the fear of the revelation of my secret would alienate me from the ones I love. In order to guard my secret, I have become very deceiving, alienating, and paranoid. I would avoid conversations that I thought would somehow lead to the discovery of my secret. I became very selective with the people I communicated with. I have in term become a prisoner to this secret, letting it control my every action and thought. I know I should tell my close friends and family about my secret. I cannot go through my life continuing to deceive the people closest to me. Why can't I have the courage to tell people my secret? I envy those who can speak their own mind proudly and not care of the consequences his words can cause him. I dream of that day when I can be liberated from the chains of my secret, and show the world the real me.