Lecture Business finance - Chapter 9: Sources of short-term debt

Chapter 9 Sources of Short-Term Debt Copyright 2006 McGraw-Hill Australia Pty Ltd PPTs t/a Business Finance 9e by Peirson, Brown, Easton, Howard and Pinder 9–1 Prepared by Dr Buly Cardak Learning Objectives • Identify the main forms of short-term borrowing by Australian companies. • Understand the characteristics of trade credit and calculate the implied interest rate. • Understand the main forms of bank lending and appreciate when each may be suitable to a borrower’s needs. Copyright 2006 McGraw-Hill Australia Pty Ltd PPTs t/a Business Finance 9e by Peirson, Brown, Easton, Howard and Pinder 9–2 Prepared by Dr Buly Cardak Learning Objectives (cont.) • Understand debtor finance, inventory loans and bridging finance, and be able to distinguish between them. • Understand the basic features of the interbank cash market. • Understand the process of using promissory notes and bills of exchange to raise funds. • Calculate prices and yields for promissory notes and bills of exchange. Copyright 2006 McGraw-Hill Australia Pty Ltd PPTs t/a Business Finance 9e by Peirson, Brown, Easton, Howard and Pinder 9–3 Prepared by Dr Buly Cardak Introduction • ‘Short-term debt’ is defined as debt due for repayment within a period of 12 months. • The major short-term borrowing choices available to Australian companies are: – Trade credit. – Borrowing from banks and other financial institutions. – Issuing short-term marketable debt securities such as promissory notes and bills of exchange. Copyright 2006 McGraw-Hill Australia Pty Ltd PPTs t/a Business Finance 9e by Peirson, Brown, Easton, Howard and Pinder 9–4 Prepared by Dr Buly Cardak Trade Credit • When companies sell goods or services to other businesses ‘on credit’. • Usually, the seller allows the purchaser several weeks to pay. • Thus, trade credit is, in effect, a form of short-term debt in which the seller lends the purchase price to the purchaser. Copyright 2006 McGraw-Hill Australia Pty Ltd PPTs t/a Business Finance 9e by Peirson, Brown, Easton, Howard and Pinder 9–5 Prepared by Dr Buly Cardak ... - tailieumienphi.vn