traditionally rely heavily on short-term deposits to fund long-term loans to consumers and businesses. This reliance makes a bank susceptible to major problems if conditions turn against it, or it sees a sudden mass withdrawal of deposits. This is why the FFIEC tries to monitor banks' stability with the UBPR. (1) Loans are one of the main sources of income for most commercial banks. They lend individuals and small to medium sized businesses/enterprises loans and short term financial assets with a predetermined
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Financing PPL Corporation’s Growth Strategy Monday’s lecture (October 28, 2002) will go over some of the issues associated with the relation between investment and financing decisions, and discuss leasing, off-balance sheet financing, and synthetic leases, and will review finance terms important in this case. Prepare any questions you may need answered to complete your analysis for that class. Exhibits 1, 2, 3, 5, and 7 are available in an Excel spreadsheet on the website (if you downloaded the
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17 in 2010 showing a tremendous shortage in cash and cash equivalents, and receivables to cover short-term debts in the immediate future. Upon further review of the current assets, it was found that Merchandise Inventories make up 71% of current assets in 2011 and 78% of current assets in 2010, which could potentially pose an issue on how quickly these assets can be converted to cash to settle short-term debts. However, Home Depot declared in their supporting notes that their inventory is evaluated
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company experiencing rapid growth with an anticipation of a further increase in sales. However the company has constant cash flow problems. The financial ratios in appendix III look poor due to their current state of under financing. Why is the Clarkson Company so short of funds despite its record of profitable operations? See Appendix I, II&III. We find that increasing amount of borrowing despite of its onsistent profitability came from following reasons. First is the firm’s financial position
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CLC relies heavily on trade credit and short term debt. • Clarkson wants to move to Northrup National Bank – a larger bank – with a a $750K short-term LOC. • George Dodge, Northrup officer, is cautiously receptive. He’s asked a team of intelligent, attractive analysts to investigate the current state of CLC. Problem Identification “Clarkson wants to move to Northrup National Bank – a larger bank offering a $750K LOC.” • CLC overuses expensive short-term debt to finance growth and buyout his
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The process of securitization as core of the subrime mortgage crisis The process of securitization created many opportunities for financing, given that the US financial system is much diversified and does not depend only on bank financing. Indeed, a long chain of intermediaries are involved in channeling funds from the ultimate creditors to the ultimate borrowers. The simple model of intermediation chain would consist of households (borrowers), mortgage bank and household (depositor). On the contrary
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three-legged stool. The legs are operations, marketing, and finance/accounting. As you, the leader, try to sit atop the stool, it must be balanced so that you can shift your position and sit comfortably. However, if one of the legs of the stool is too short or too long, then the stool is difficult to manage and unstable (http://www.thefullermangroup.com). Here is an example of an unbalanced firm. A firm borrows cash in order to expand its facility and operating capacity. However, sales remain constant
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prepares the company's investing and financing plans for the next three years. Flash Memory is a small firm that specializes in the design and manufacture of solid state drives (SSDs) and memory modules for the computer and electronics industries. The company invests aggressively in research and development of new products to stay ahead of the competition. Increased working capital requirements force the CFO to consider alternatives for additional financing. In addition, he must also consider an
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world, the US is an ageing society (CITE SOMETHING). Between 2000 and 2050, the number of older people is projected to increase by 135% (CITE SOMETHING). Moreover, the population aged 85 and over, which is the group most likely to need health and long-term care services, is projected to increase by 350% (CITE SOMETHING). Over this time period, the proportion of the population that is over the age of 65 will increase from 12.7% in 2000 to 20.3% in 2050; the proportion of the population that is age 85
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defined as: “A contract by which one conveys real estate, equipment, or facilities for a specified term and for a specified rent.” In layman terms however, leasing refers to a contract between two parties- the lessee to acquire the use of an asset with payment structured over time. The lessee chooses an asset and finds a lessor who will acquire it for him/her and enters into a non-cancellable, long term contract with the lessor to use and gain benefits from the fixed asset. The fixed asset is leased
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