Banks ulet Thursday, November 4,2021 8:01 AM Term definitions: * product roster - product supply/reservoir + lucrative projects - profitable projects * portfolio management - selection of investments that will meet long -term financial goals and risk tolerance of investor « financial derivatives - contract between two or more parties whose value is based on an agreed-upon undertying financial asset or set of assets (Source: Investopedia) ‘SHORT-TERM FUNDS, * these are funds used by businesses for their daly operations. + may be used as working capital for your daly business operations. BANKS: * usually a good source of short-term funds (shortterm financing). For sales on credit or inventory needed to be paid, business may turn to the banks for short-term financing while cash has not yet been received or paid. WORKING CAPITAL + current assets used as day-to-day operations. (Eugene F. Bringham & Joel F Houston) + usually cash, cash equivalents or marketable secures, accounts receivables, and Inventory + Savings account and current accounts (country's import and exports of goods and services) are sources of working capital Benefits of exporting and importing: + New products + New opportunities If manufacturing ka, yung raw materials ineexport mo pag nake transform na eer Accounts ReceivablesUses of Working Capital Net Working Cay ‘helps in carrying out tthe normal operations of the business. ‘+ used to generate sales and profits for the business. (cash is churned to either invest in inventory or to pay off short term obligations so that the cost of doing business is reduced. Marketable Securities ‘* are used to generate investment income through capital appreciation in stock investments or trading through bond invesments. Accounts Receivables * increase sales by making buying more attractive to customer with the availabilty of the credit. Banks ‘ Abank is a financial intermediary that brings together depositors and borrowers. ‘+ are a major source of funding for our working capital requirements. ‘+ A business can deal with different types of banks. ‘Types of Banks (RECAP) 1.Commercal Banks + clients are mostly retail customers. + they are the moms and dads inthe neighborhood who are either employed, se ‘employed, or who have small businesses to operate, + main business is lending ‘+ many transactions and usually nat very large in siz. + tobe able to reach more clentele, commercial banks put up many branches in different locations OBJECTIVE: To be closer to their market so that they may service them better and faster. 2. Universal Banks + are also commercial banks but as LICENSED to do more sophisticated banking services than commercial banks. * their clientele comprises of the TOP CORPORATIONS of the country and GLOBAL BUSINESSES. ‘= have business dealings with TOP BUSINESS CORPORATIONS LOCALLY and GLOBALLY, and lend to these top business conglomerates, manage their corporate funds, invest in their portfolio, and advise these companies on financial market movements and directions. ‘+ transactions are usually BIGGER IN SIZE than commercial bank transactions, MULTICURRENCY, and GLOBAL in nature. 3. INVESTMENT BANKS + similar to universal banks in terms of sophisticated banking services. '* they do not have branches all around the country unlike commercial banks. ‘+ more specialized and deal with the top corporations, global businesses and governments. + perform market making activities such as trading, fund management and portfolio management.NON-BANKS. * are financial intermediaries as well but are supervised and regulated by another government body, the Securities and Exchange Commission (SEC). Banks on the other hand, are regulated by its Central Bank. In the Philippines, itis the Bangko Central ng Pilipinas (BSP) Life insurance companies, investment companies, finance companies, and ‘mortgage companies are examples of nonbank financial intermediaries. Investment Companies * pool your money together with the money of other investors and invest these in financial instruments-stocks, bonds, currencies, commodities, financial derivatives. * they manage this pool of funds which are called mutual funds. These accounts are not covered by deposit insurance. Mutual funds are sold based on anet asset value per unit. * investors may come in and out of mutual funds. * there are different types ranging from aggressive mutual funds invested in stocks, to conservative mutual funds invested in money-market instruments and fixed-income securities. Insurance Companies + sell coverage or protection from events such as death of a loved one, fre, or accident. «= Insurance premiums are paid by the owner/buyer over a period of time such as five to ten years in exchange for coverage for the events mentioned. In return, the insurance companies manage the premiums by investing the sare in financial instruments that offer good returns. - i.e. stocks, bonds, currencies, commodities, financial derivatives, or realestate. ‘in the event that any of the above occurs, the insurance owner is compensated through the insurance claim. * Other services that an insurance company offers include: >lend on cash value of the insurance policy Soffer sinsle navment or nartial navment loans. Private Equity Funds * are funds from private investors used to finance lucrative projects that are projected to give good returns. * are big in Europe because the market has grown and investors have become more sophisticated, more knowledgeable and are trying to move away from regulated investments and funds. To avoid Regulated invesimentswncotecne [SRT ‘asom 800) =m) mao sesitero smo) ase so : eso] soso] =n] no ASSIGNMENT: ‘Sees in amuse and February were 250,00 and 7350.00 resp. Sales of 200,00, Pan 0 ‘2nd 750,200 have been forecast fr March, Api and May respectively. Devel 2 cash budget for ‘Marchto May. Using historical data as bas, 25% ofthe busines aes are in cash orm, SO have tenerated accounts recenables collected after one month, and the remaining M% have generated _2ccounts receivable collected after two months, Mon mest payment of PLATD00 sao recived thom a bank certificate of depos. ‘Purchases repesont 92% of sales OF this amount, 12% padi cash 50% and 3% ae paid after one ‘and two months respectively, Aer purchas, the busines ko pays arent of 20,000 monty ‘Wages are 7% c month sls. On the ter hand, ied salary cost for the years 15,000 monty. ‘aes of 65,000 wb pid in May whe capa expenditure in the frm of. Be equipment costing 85,00 willbe purchased and pai in instalment basis fr 4 months rom February to May. Furthermore, an interest payment of 17000 fs due every month. AF200000 precio payment ako sue in Aon Consider the folowing nfrmation blow: ‘the end f Fabry, the cash balance was 500, The target cash alse was 100,00. oe zoom] snow] cmon] sow a te fer ser — = 230,000 32,000 368,000 460,000 eke (ae) ec cr a st ‘18000 emo] sme Skea aS — 2000 ed ad 20.000 20.000 reno zm vom, | Cn Sie ‘eum Tate oan no aso = 7000 17,900 17000) 117,000 117,000 rT a oe 7251390 saa san oaas0ie ry 7 Cones 75.300 a0 7005 oy ao Tea 7 7300 7251390 30800 ssoxio ‘7es0 Net oh ow 2400 ras0 an70 10310 1350 Ail fg oh ‘000 70 71060 Freak 5.000 man 7060 12210 s 220000 0090 103.00 ae ast Foam ceca nce 77 mano