What is off-balance-sheet financing? Why might a companybe interested in using off-balance-sheet financing?

Q: What is the connection between Business Valuation and Financing Options ?

A: Business valuation:  The economic worth of a firm or business unit is determined via business…

Q: If a firm is interested in the current cost of its debt obligations, then it can simply look at the…

A: Cost on debt can be considered after deducting tax expenses. Cost of debt is eligible for tax…

Q: why an increase in cost of debt will increase cost of capital associated with business risk and…

A: The cost of capital is the minimal rate of return that a company must earn before it may generate…

Q: Up to what extent can debt financing be useful to the company?

A: Debt financing means raising the capital for the company in the way of selling bonds, debentures,…

Q: What type of financial institutions may offer the services for reception and transmission of orders…

A: Order receipt and transmission refer to receiving a purchase or sale order from a customer and…

Q: Critically discuss over-investment and under-investment problems due to debt usage. What kinds of…

A: Capital structure means the amount of debt and equity which the firm has as its capital. The company…

Q: Why do firms need to calculate cost of financing using weights?

A: Financing refers to the management of large amount of money. It is a process of providing or raising…

Q: What are the primary differences between debt financing and equity financing?

A: Financing refers to providing the funds to the business for business activities, individuals and…

Q: In analyzing a company's financial statements, which financial statenent would a potential investor…

A: Financial statements: Financial statements are condensed summary of transactions communicated in the…

Q: What are some forms of off-balance-sheet financing?

A: Balance Sheet: Balance Sheet summarizes the assets, the liabilities, and the Shareholder’s equity of…

Q: What is one of the primary concerns of financial analysis regarding a firm's debt payments?

A: A firm's debt payment ability is one of the main concerns for the suppliers of the business, to the…

Q: What are the differences and similarities between debt financing and equity financing?

A: Similarity between debt and equity finance. 1 Both bonds and equity are traded in market. 2 Prices…

Q: What types of companies use commercial paper to meet their short-term financingneeds?

A: Commercial paper: Commercial paper is a kind of unsecured, short-period debt instrument delivered by…

Q: What are lines of credit? From the viewpoint of a short-term creditor, why do lines of credit…

A: Financial statements: Financial statements are condensed summary of transactions communicated in the…

Q: What part of a firm's balance sheet can be used as collateral?

A: The financial position of the company can be arrived from the income statement prepared by the…

Q: What is the difference between Direct and Indirect Financing?

A: Difference between direct financing and indirect financing are as follows

Q: es the most accurate estimate of the net realizable value of the receivables. The reason for it is…

A: Allowance method It is a method for accounting for bad debt expense, where uncollectible accounts…

Q: What are the advantages of regulation of financial reporting?

A: Financial reporting refers to the disclosing of communicating the financial statements to the…

Q: What is the advantage of issuing bonds instead of obtaining financing from the company’s owners?

A:

Q: What is off balance sheet financing?  Why do we care about it?

A: Financial statements can be defined as a summary of the financial performance of the business over…

Q: Why is it advantageous for a company to finance its receivables?

A: Accounts receivable is the amount due to a firm for the use of goods and services but not yet paid…

Q: How does credit risk for a financial institution differs from default risk and What are the problems…

A: Lender loans money to the borrower, and there subsist as the risk of non-repayment of loan or…

Q: Explain how factoring works. Of what benefit is factoring to a firm that sells its receivables?

A: Lets first understand the meaning of factoring. Factoring is a selling the debtor to the factor at…

Q: What is off–balance sheet financing?

A: To keep the debt-to-equity and leverage ratios low, companies opt to record certain liabilities and…

Q: What is one of the possible choices for financing a company’s operations and how do we account for…

A: A Company uses various short term, medium term, and long term sources of finance for its business…

Q: How does company’s investment in receivables is influenced by several variables? What are the…

A: Receivables: Receivables refer to an amount to be received in future. General classifications of…

Q: Why is EBIT generally considered to be independent of financial leverage?Why might EBIT be…

A: Introduction: In finance, leverage is a general concept to combine gains and losses by some…

Q: Why are claims on income discretionary with equityfinancing but nondiscretionary with debt…

A: Liability: In monetary bookkeeping, a liability is characterized as the future penances of financial…

Q: Why should an investor use debt?

A: Debt investments represent the loan which an investor lends to earn interest along with the…

Q: What is "Intermediation" and why do we use Financial Intermediaries, instead of direct finance, for…

A: Financial intermediary is the organization which acts as a link between the investor and the…

Q: What are the advantages and disadvantages ofusing short-term debt as a source of financing?

A: Short-term debt: It is a kind of debt that is repaid in a small span of time or within a year. The…

Q: liabilities not be reported on the balance sheet?

A: Contingent liabilities are liabilities, the question of settlement of them arise only on happening…

Q: What are the major economic functions of the interest rate? How might the fact that many businesses…

A: Interest is the price paid by the borrower for using the money borrowed from the lender.

Q: What are the key variables that influence a company’s investment in receivables?

A: The variables that influence the company investment in receivables are as follows, The level of…

Q: What are the main distinctions between a traditional financialinstrument and a derivative financial…

A: