The Difference Between Secured and Unsecured Loans

The consequences of increasing credit period are more cash required to be invested in working capital and also losses due to increased bad debts.

As a result, holding cash would be essential component of the firm strategy. To develop new products, buy new equipment or expand geographically, firm has to spend money on marketing research, product design, prototype development and so on. Moreover, if a recession hits and the economy start to slow down,

Making mistakes when it comes to your credit is a lesson that many people learn the hard way. Constant phone calls, mail, and threats can make a tough financial situation worse. Either how well or how poorly you manage your debts and finances are available to creditors to see when you apply for credit, such as for a retail store card, or even an auto or home

As shown in the ratios chart, working capital has increased by $13M. Maturities of short-term investments and cash flow from operations are projected to be sufficient to sustain the company’s overall financing needs, including capital expenditures. The following corporate strategic plan identifies a project that needs financial backing.

* Taking on debt gives the company the ability to use cash for projects and short term investments.

what was available for the suppliers of capital (that is, creditors and owners). An alternative cash flow,

Working capital is of major importance to a business because it controls the current day-to-day operations including payment of salaries, wages, inventory, raw materials, other business expenses, purchase of stocks, buildings, land, fixed assets, etc.

The functions of working capital are to ensure an entity has enough working capital by turning long-term assets in services and revenue. This is done by obtaining cash from different resources (such as supplies and labor), arranging working cost, provision for credit sales and provision of a safety margin.

As shown in the ratios chart, working capital has increased by $13M. Maturities of short-term investments and cash flow from operations are projected to be sufficient to sustain the company’s overall financing needs, including capital expenditures. The following corporate strategic plan identifies a project that needs financial backing.

The Lawsons’ efficiency ratios are another section the bank will find troubling. The company’s age of payables has nearly tripled over the last four years. This can be detrimental to the company’s image and reliability including their reliability toward the bank if granted the loan. Along with increasing age of payables is increasing age of receivables and age of inventory. Indicating that Mr. Mackay is taking longer to collect his receivables and that he has purchased too much inventory. Too much inventory results can result in further issues

Depending on how much additional investment needed and what will be the payback period. Another cash flow statement will be needed for further reviewing to decide whether additional funding will be a good

Credit reports and scores are really important. There are two types of reports and scores, which is good and bad.If you have a good credit report you will have to pay a lower interest rate,when you have a bad credit report you can’t get a loan and your interest rate might be higher. Whatever you have on your report determines how much you pay back. The range is 300 to 850, but if you have 620 and down it’s considered bad credit and it shows that person isn’t capable of being responsible of paying back the loan they had gotten. When you have a good score it could drop down but it takes time to make it better. Late payments drop your score big time but payments on time can improve your score. Loans basically rely on your credit reports and scores.

Furthermore, if an organisation does not have enough cash resources in order to settle its current liabilities, this will highlight great inefficiency with stock turnover not being sold. A good company such as Sainsbury’s we see is healthy because revenue is recognised from inventories sold – this revenue allows cash to flow in order to pay for short term and long-term liabilities. It is evident that there are insufficient cash flowing into the company from investing activities and financing activities, which are shown by the brackets.

The management of cash is essential to the survival of any organization. Managing an organization’s financial operation requires knowledge of the economy and ways to maximize revenue. For any organization to operate on a daily basis adequate cash flow is required. Without cash management the organization will be unable to function because there is no cash readily available in case of inconsistencies in the market. Cash is also needed to keep the cycle of the company’s operations going.

Improving working capital position, a company is able to compare from year to year any increase in revenue; increase in production due to a decrease in variable or fixed costs, increase in sales due to a new sales workforce and any increase in liabilities; new short term creditors, a higher accounts payable account due to the need to purchase new materials. A company can improve its working capital by trying to keep a healthy balance between the two accounts, cutting costs, and analyzing its current short-term debt in terms of how to decrease it or find alternative ways to avoid it such as restructuring production procedures. (Schroeder, el. 2014)