Day: October 18, 2020

Factors Influencing the Capital Structure Availability of securities This influences the company’s use of debt finance which means that if a company has sufficient securities, it can afford to use debt finance in large capacities. Cost of finance (both implicit Read More …

Time (duration) According to the matching/moderate principle, assets and liabilities should be matched and the finance should be raised according to the maturity period of the assets to be acquired. Cost of finance Different sources of finance attract different costs. Read More …

Leasing Leasing is a contract between two parties where one party known as the lessor (owner) gives another party known as the lessee the right to use an asset upon payment of periodic lease rentals.   Classification of leases Operating Read More …

Bills of Exchange A bill of exchange is an unconditional order in writing addressed by one person to another requiring the person to whom it is addressed to pay to him as his order a specific sum of money. A Read More …

Trade Credit Refers to the credit that a customer gets from suppliers of goods in the normal course of business. In practice the buying firms do not have to pay cash immediately for the purchases made. The deferral of payments Read More …

These are short term debt instruments issued by the government through the central bank.   Features of Treasury Bills They are issued at a discount. They are used as a measure of the risk free rate of return. They can Read More …

Under invoice discounting some quality invoices are selected and sold to a financial institution. A proportion of the debt (invoices) is paid immediately for firm and a further payment is made once the debt has been collected.   The firm Read More …