...the firm’s funds to a relatively low-yielding (in comparison to fixed assets) investment. II. Managing the firm’s use of current liabilities A. The greater the firm’s use of current liabilities, other things being the same, the less will be the firm’s liquidity. B. There are a number of advantages associated with the use of current liabilities for financing the firm’s asset investments. 1. Flexibility. Current liabilities can be used to match the timing of a firm’s short-term financing needs exactly. 2. Interest cost. Historically, the interest cost on short-term debt has been lower than that on long-term debt. C. Following are the disadvantages commonly associated with the use of short-term debt: 1. Short-term debt exposes the firm to an increased risk of illiquidity because short-term debt matures sooner and in greater frequency, by definition, than does long-term debt. 2. Since short-term debt agreements must be renegotiated from year to year, the interest cost of each year’s financing is uncertain. III. Determining the appropriate level of...
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...Management ( Learning Goals 1. Review the key components of credit terms, accounts payable, and the procedures for analyzing them. 2. Understand the effects of stretching accounts payable on their cost and on the use of accruals. 3. Describe interest rates and the basic types of unsecured bank sources of short-term loans. 4. Discuss the basic features of commercial paper and the key aspects of international short-term loans. 5. Explain the characteristics of secured short-term loans and the use of accounts receivable as short-term-loan collateral. 6. Describe the various ways in which inventory can be used as short-term-loan collateral. ( True/False 1. Accounts payable are spontaneous secured sources of short-term financing that arise from the normal operations of the firm. Answer: FALSE Level of Difficulty: 1 Learning Goal: 1 Topic: Accounts Payable 2. Notes payable can be either spontaneous secured or spontaneous unsecured financing and result from the normal operations of the firm. Answer: FALSE Level of Difficulty: 1 Learning Goal: 1 Topic: Notes Payable 3. Accounts payable result from transactions in which merchandise is purchased but no formal note is signed to show the purchaser’s liability to the seller. Answer: TRUE Level of Difficulty: 1 Learning Goal: 1 Topic: Accounts Payable 4. In credit terms, EOM (End-of-Month) indicates that the accounts payable must be paid by the...
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...Mission To build Prime Bank Limited into an efficient, market driven, customer focused institution with good corporate governance structure. Continuous improvement in our business policies, procedure and efficiency through integration of technology at all levels. Vision To be the best private commercial bank in Bangladesh in terms of efficiency, capital adequacy, asset quality, sound management and profitability having strong liquidity. Objective For our customers: • To provide the most courteous and efficient service in every aspects of its business • To be innovative in the development of new banking products and services For our employees: • By promoting their well-being through attractive remuneration and fringe benefits. • By promoting good stuff morally through proper staff training and development, and provision of opportunities for career development. For our share holders: • By forging ahead and consolidating its position as a stable and progressive financial institution. • By generating profits and fare return on their investment. For our community: • By assuming our role as a socially responsible corporate citizen in a tangible manner • By adhering closely to national policies and objectives thereby contributing towards the progress of the nation Strategy PBL has consistently remained focused on efficient customer service by providing wide range of product and services. PBL focused on our diverse products and services. Our customer group range...
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...Cash Management Paper INTRODUCTION Cash management techniques provide a framework for companies to follow that will enable it to maintain cash that is needed to operate the business. The primary goal of cash management is to maintain low balances of cash on hand but at the same time striking a balance so that necessary cash is available to pay for planned transactions, unexpected transactions, and compensating balances to banks for services provided (Block & Hirt, 2005). As part of the cash management strategy, a company may also look to short term financing to maintain its cash reserve. This paper will compare and contrast the various cash management techniques and the various methods of short-term financing that are available to companies to manage cash flow. CASH MANAGEMENT TECHNIQUES One cash management technique involves the study the company’s daily, weekly, and yearly cash flow cycle and cash balances (Block & Hirt, 2005). “Cash flow relies on the payment pattern of customers, the speed at which suppliers and creditors process checks, and the efficiency of the banking system.” (Block & Hirt, 2005, p. 175). Once a sale is completed, the company either receives an immediate cash payment or an account receivable which will be collected at a future time to assist in purchasing or manufacturing additional inventory (Block & Hirt, 2005). The rise of ecommerce has also provided a cash flow benefit to companies in that all sales require a credit card (Block & Hirt...
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...Investment Decision on DSE Listed Company Chapter-1 : Introduction The Dhaka Stock Exchange is the prime bourse of the country. Through its nonstop highly fault tolerant screen based automated trading system the exchange has been offering facilities for transparent and highly efficient provisions for secondary market activities of securities. Origin of the topic This term paper originated as an academic requirement of BBA Program. This is authorized and organized by the department of BBA. After completion of the program period a student must submit the term paper on the assigned topic to the Supervisor and to the department. The program is three months duration. I was assigned to Dhaka Stock Exchange Limited, to complete the program. Objective of the study Objectives of this study are as follows- - To present an overview of Dhaka Stock Exchange. -To identify the trend line of DSE and that of those securities incorporated in DSE. -To identify the strength and performance of DSE 5 Banks. . -To compare among DSE 5 Banks. . -To develop the practical knowledge by the practical orientation of Work. Scope of the Study Scope of the study could be to understand contribution of stock exchange in economic development of a country. The economy of Ban in gaining in confidence and scope for development of capital market is gaining ground. If we can educate the investors regarding risk in management and adopt suitable legal measure to protect the investor’s interest, a substantial...
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...financing requirements. 3) New banking laws allowed more competition and gave banks the right to expand across state lines to create larger, more competitive markets. They also increased bank mergers. 4) The prime rate is the rate that a bank charges its most creditworthy customers. The average customer can expect to pay one or two percent (or more) above prime. 5) LIBOR stands for London Interbank Offered Rate. It is consistently below the prime rate. 6) The use of a compensating balance or minimum required account balance allows the banker to generate a higher return on a loan because not all funds are actually made available to the borrower. This benefit to the lender need not be a disadvantage to the borrower. The borrower may, in turn, receive a lower quoted interest rate and certain gratuitous services because of the compensating balance requirement. 7) Commercial paper can be either purchased or issued by a corporation. To the extent one corporation purchases another corporation's commercial paper as a short-term investment, it is a current asset. Conversely, if a corporation issues its own commercial paper, it is a current liability. 8) In comparison to bank borrowing, commercial paper can generally be issued at below the prime rate. Furthermore, there are no compensating balance requirements, though the firm is required to maintain approved credit lines at a bank. Finally, there is a certain degree of prestige associated with the...
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...and Employee Satisfaction of Prime Bank Limited Dear Sir, This is a great pleasure for me to submit the report, which is a partial requirement for the BBA program. I have prepared my report on” Compensation Management and Employee Satisfaction of Prime Bank Limited.” I have tried my best to explain my learning and experience in this report .I have gathered information from practical operations. The report is prepared under your supervision and respectfully acknowledges your guidance and help. We will be glad to clarify any queries regarding this report. I, therefore, hope your kind human and consideration will inspire help us to develop our knowledge about the financial company analysis. Sincerely yours, ASRAFUL ISLAM Roll No: 9828817 Registration No: 1845044 Session: 2010-2011 Department of Management Narsingdi Govt. College. Student’s Declaration I’m Asraful Islam of Bachelor of Business Administration (BBA)2nd Batch bearing Roll- 9828817 from Department of Management, Narsingdi Govt. College, Narsingdi would like to declare here that a term paper on “Compensation Management and Employee Satisfaction of Prime Bank Limited” has been authentically prepared by me. While preparing this term paper, I didn’t breach any copyright...
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...liabilities requires choosing appropriate levels of financing and involves trade-offs between risk and profitability. This chapter also reviews sources of secured and unsecured short-term financing, including the role of international loans. Spontaneous sources, such as accounts payable and accruals, are differentiated from negotiated bank sources, such as lines of credit. The cash discount offered on accounts payable and the costs of forgoing the discount are described. Secured sources include bank and commercial finance company loans backed by collateral such as inventory or accounts receivable. PMF DISK This chapter's topics are not covered on the PMF Tutor or the PMF Problem-Solver. PMF Templates The following spreadsheet template is provided: Problem 15-8 Topic Cost of bank loan Find out more at www.kawsarbd1.weebly.com 393 Last saved and edited by Md.Kawsar Siddiqui Part 5 Short-Term Financial Decisions Study Guide The following Study Guide examples are suggested for classroom presentation: Example 1 4 Topic Loss of loan discounts Accounts receivable as collateral Find out more at www.kawsarbd1.weebly.com 394 Last saved and edited by Md.Kawsar Siddiqui Chapter 15 Current Liabilities Management ANSWERS TO REVIEW QUESTIONS 15-1 The two key sources of spontaneous short-term financing (financing that arises from the normal operating cycle) are accounts payable and accruals. Both of these sources are spontaneous, since their levels increase and decrease...
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...setting out objectives and identifying resources, analyzing data and making financial decisions, to tracking the variance between actual and budgeted results and identifying the reasons for this variance. The term "strategic" means that this approach to financial management has a long-term horizon At the most fundamental level, financial management is concerned with managing an organization's assets, liabilities, revenues, profitability and cash flow. Strategic financial management goes a step further in ensuring that the organization remains on track to attain its short-term and long-term goals, while maximizing value for its shareholders. Strategic financial management also means that short-term goals may occasionally need to be sacrificed to meet longer-term objectives. A typical example is when a loss-making company trims its asset base through factory closures or headcount reduction in order to reduce operating expenses. While such actions have a detrimental effect on near-term results because of restructuring costs and other one-time items, it positions the company to achieve profitability in the longer term. (c ) Short Term Financial Management and Strategy Chapter 15: Short Term Financial Management Learning Goals Describe the scope of short-term financial management and the cash conversion cycle. Explain the funding requirements of the cash conversion cycle and strategies for minimizing negotiated liabilities. Understand inventory management:...
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...2008, a sequence of bank and insurance company failures resulted in a financial crisis that effectively brought global credit markets to a halt and required unprecedented government intervention. For example, Fannie Mae (FNM) and Freddie Mac (FRE) were both taken under the control of the government. In addition Lehman Brothers declared bankruptcy after it was unable to find a buyer. Furthermore, Merrill Lynch was purchased by Bank of America, and American International Group was bailed out by the federal government with an $85 billion dollar capital injection. Shortly after, Washington Mutual (WM) went under; however, J P Morgan Chase (JPM) agreed to purchase the assets of WM resulting in the largest bank failure in the history of the United States. Due to the failures stated above it brings me to realize why banks are so hesitant to lend money between themselves or to anyone. The crisis began in the real estate market and the subprime lending crisis. As long as we can remember, the values in commercial and residential properties have been exponentially increasing and were not interrupted for nearly a decade. With housing prices increasing it lead to banks lowering lending standards allowing unqualified buyers to take out mortgages while at the same time deregulation blended lines between traditional investment banks and mortgage lenders. However, when housing prices failed to rise and homeowners were not able to keep up with their payments, banks were obligated to recognize...
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...REPORT ON CREDIT OPERATIONS SYSTEM IN THE PRIME BANK LIMITED PREPARED FOR M. MUZAHIDUL ISLAM ASSOCIATE PROFESSOR DEPARTMENT OF BANKING UNIVERSITY OF DHAKA PREPARED BY NIPA SAHA ROLL-423, MBA 1ST BATCH DATE OF SUBMISSION: MAY 10, 2006 DEPARTMENT OF BANKING UNIVERSITY OF DHAKA Supervisor's Certificate This is to certify that the Internship Report on "Prime Bank Ltd." in the bona fide record at the report is done by Nipa Saha as a partial fulfillment of the requirement of Masters of Business Administration (MBA) degree from the Department of Banking, University of Dhaka. -------------------------------------- Signature of Supervisor ---------------------------------- Date. Declaration I do hereby solemnly declare that the work presented in this Internship Report has been carried out by me has not been previously submitted to any other University/ College/ Organization for an academic qualification / Certificate / Diploma or degree. The work I have presented does not breach any existing copyright and no portion of this report is copied from any work done earlier for a degree or otherwise. I, further undertake to indemnity the department against any loss or damage arising from breach of foregoing obligation. -----------------------------------...
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...Commercial Paper Thomas K. Hahn C ommercial paper is a short-term unsecured promissory note issued by corporations and foreign governments. For many large, creditworthy issuers, commercial paper is a low-cost alternative to bank loans. Issuers are able to efficiently raise large amounts of funds quickly and without expensive Securities and Exchange Commission (SEC) registration by selling paper, either directly or through independent dealers, to a large and varied pool of institutional buyers. Investors in commercial paper earn competitive, market-determined yields in notes whose maturity and amounts can be tailored to their specific needs. Because of the advantages of commercial paper for both investors and issuers, commercial paper has become one of America’s most important debt markets. Commercial paper outstanding grew at an annual rate of 14 percent from 1970 to 1991. Figure 1 shows commercial paper outstanding, which totaled $528 billion at the end of 1991. This article describes some of the important features of the commercial paper market. The first section reviews the characteristics of commercial paper. The second section describes the major participants in the market, including the issuers, investors, and dealers. The third section discusses the risks faced by investors in the commercial paper market along with the mechanisms that are used to control these risks. The fourth section discusses some recent innovations, including asset-backed commercial...
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...Acknowledgement First of all, I am expressing my sincere great fullness to almighty to prepare this term paper, no noble achievement can be achieve by an individual term paper depends on the contribution of number of people specially their thoughtful guidance and suggestions to complete this term paper. I am indented for their kind recommendation, submission, direction, cooperative and their collaboration. I want to give my special thanks to the Academic Supervisor Professor Md. Didarul Islam, Department of Accounting for his support and enormous help, especially his guidelines throughout the period of preparing this term paper. Declaration I do hereby Solemnly declare that the work submitted in the term paper titled “Sources of Short-Term Financing in Bangladesh” has been carried out by me and has not been previously submitted to any other university, college, organization for an academic purpose or certificate or diploma degree. This work that I have submitted does not break any existing copyright and no portion of this report is copied from any work done earlier for a degree or otherwise. I further undertake to indemnify the department against any loss or damage arising from breach of the forgoing obligations. Md. Golam Kibria BBA(hon’s) Final Year Reg. No. 09101626055 Major: Accounting Supervisor’s Certificate This is to certify that the term paper on “Sources of Short-Term Financing in Bangladesh” submitted for the award of the Degree of Bachelor of Business Administration...
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...millennia, the subsequent meltdown was most gruesome over the past 3 years. What began as a crisis of the sub-prime mortgage market in the United States quickly transcended national borders and developed into a upheaval of epic proportions. What ensued was a systematic debacle of stock exchanges, investment banking, derivatives etc. all financial markets ranging from equity, currency, real estate, futures etc. In order to fully understand the devastation caused by this dilemma, we have to take focus on the core issues and identify the stream of events as they occurred and how they subsequently collapsed global financial markets. Housing Bubble Burst The global financial crisis began through the US sub-prime mortgage market. The past two decades leading up to the year 2005 had experienced phenomenal growth in terms of increases in housing prices. There was an abundance of capital flowing into the country and this translated into excess liquidity available for banks to lend out. The Sub-Prime Mortgage Market refers to a market where people with bad credit history can obtain house loans at relatively better rates. It doesn’t imply that the interest rates are low, but rather they don’t have to go through the rigors they would face due to their poor credit rating. Since the US is the largest consumption economy in the world, which implies the use of credit facilities, banks started encouraging consumers to avail these easy loans. The housing bubble experienced its pinnacle in 2005-06...
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...Evaluation of Prime Bank Limited in Terms of Capital Adequacy By Md. Abdullah Al Mamun Pabna University of Science and Technology, Bangladesh Abstract - The study aims at evaluating performance of prime bank. Data of the bank is analyzed using capital adequacy ratio, debt equity ratio and advance to asset ratio for the period 2008 to 2012. The study finds, though high debt equity ratio bank maintains capital above regulatory requirement. This will help the researcher and bank to further improvement in capital adequacy to meet regulatory requirement and enhance bank performance. Keywords : capital, capital adequacy ratio, performance. GJMBR-C Classification : JEL Code: G21 PerformanceEvaluationofPrimeBank LimitedinTermsofCapitalAdequacy Strictly as per the compliance and regulations of: © 2013. Md. Abdullah Al Mamun. This is a research/review paper, distributed under the terms of the Creative Commons Attribution-Noncommercial 3.0 Unported License http://creativecommons.org/licenses/by-nc/3.0/), permitting all non-commercial use, distribution, and reproduction in any medium, provided the original work is properly cited. Performance Evaluation of Prime Bank Limited in Terms of Capital Adequacy Md. Abdullah Al Mamun Abstract - The study aims at evaluating performance of prime bank. Data of the bank is analyzed using capital adequacy ratio, debt equity ratio and advance to asset ratio for the period 2008 to 2012. The study finds, though high debt equity ratio bank maintains...
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