Posts published in “FINANCE”

Convertible bonds, or convertible debentures, are types of bond that the holder can convert into shares in the issuing company.

Bonds, or debentures, are fixed-income financial instruments, essentially long-term loans issued by a business to investors.

A mortgage is a long-term bank loan used by the business for the purchase of land or buildings. Mortgages are secured bank loans.

A long-term bank loan is provision of finance by the lender to the business for a long period of time. The lender is a commercial bank.

The business has two options when it comes to using capital for growth. As long-term finance, it can choose Debt Finance or Equity Finance.

Hire purchase occurs when an asset is sold to the buyer who agrees to pay fixed payments over an agreed period of time. How does hire purchase work?

Sale-and-leaseback is a transaction when the business sells a particular Fixed Asset and immediately lease that asset back.

Leasing is obtaining the right to use assets in exchange of paying a leasing charge, or rent, over a fixed period of time. 

Microfinance is providing financial services such as bank loans and overdrafts to low-income customers where business finance is difficult to obtain.

Debt factoring is the process of a business selling its debt to a debt factoring company. The debt factoring company buys the unpaid invoice for cash.

What makes credits cards very similar to trade credit is that both act as a type of loan. How credit cards work? Paying off credit cards.

Businesses use trade credit to delay payments to their suppliers. They negotiate payments to take longer to pay outstanding invoices.

Overdraft is when the bank agrees to let the business spend more money than the business has in its official bank account.

External sources of finance come from outside the business. Support from family and friends belongs to external sources of finance.

In order to reduce Working Capital, the business should decrease Current Assets or increase Current Liabilities.