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Why does the company risk financing some of its working capital requirement by its short-term credits?

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Question ajoutée par Nadjib RABAHI , Freelancer , My own account
Date de publication: 2017/03/19
Ashraf E. Mahmoud (PhD)
par Ashraf E. Mahmoud (PhD) , University Lecturer, Freelancer Consultant and Trainer for Int'l Business & Banking TF. , FreeLancer

Thanks for invitation

In a very precise wording; to avoid any financing miss-matching between resources and untlizations.

Mohammad Iqbal Abubaker
par Mohammad Iqbal Abubaker , Jahaca Pty Ltd - Accounts Administrator , Jahaca Pty Ltd - Accounts Administrator

Long term sources of working capital financing

 

Equity capital

 

Equity capital refers to the portion of a company’s equity that has been obtained (or will be obtained) by trading stock to a shareholder for cash or an equivalent item of capital value. Equity comprises the nominal values of all equity issued (that is, the sum of their “par values”). Share capital can simply be defined as the sum of capital (cash or other assets) the company has received from investors for its shares.

 

 

Loans

 

A loan is a type of debt which it entails the redistribution of financial /assets over time, between the lender and the borrower. In a loan, the borrower initially receives or borrows an amount of money from the lender, and is obligated to pay back or repay an equal amount of money to the lender at a later time. Typically, the money is paid back in regular instalments, or partial repayments; in an annuity, each instalment is the same amount. Acting as a provider of loans is one of the principal tasks for financial institutions like banks. A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as collateral. Unsecured loans are monetary loans that are not secured against the borrower’s assets.

 

MarketInvoice’s offering

 

Businesses can sell their invoices through us to give them access to the working capital that might otherwise be tied up for up to 120 days. Unlike conventional working capital solutions, we don’t charge clients monthly fees, or require them to use us a certain number of times a year, allowing businesses maximum flexibility. Find out more about how it works here.

 

Sell the invoices that you want, when you want

Unlike traditional invoice discounting, there is no obligation to discount your entire debtor ledger

No lengthy lock-in periods

Ahmed Ghanem, CMA
par Ahmed Ghanem, CMA , Team Leader Head of small Enterprise Credit Risk - Risk Assessment sector , Arab Investment Bnak

the working capital contain permanent level which must be financed by long term source and mainly financed through capital , and revolving level or temporary needs that must be financed through short term source for the consideration of maturity matching    

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