Under which approach to financing with receivables does the borrower act like it borrowed money from the lender, with the receivables remaining on the borrowers balance sheet and serving as collateral? O Factoring receivables O Sale of receivables O Secured borrowing O Securitization
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Step 1: In secured borrowing, the borrower uses its receivables as collateral to secure a loan from the lender. Show more…
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Which of the following is true when accounts receivable are factored without recourse? O a. The risks and rewards of these receivables still remain with the seller. O b. The factor assumes the risk of collectibility and absorbs any credit losses in collecting the receivables. O c. The transaction may be accounted for either as a secured borrowing or as a sale, depending upon the substance of the transaction. • d. The receivables are used as collateral for a promissory note issued to the factor by the owner of the receivables.
Akash M.
which form of receivable financingis equivalentto the absolute se of accounts receivable is it: 1 pledge of AR 2Assignment of AR 3 Factoring 4 discounting of notes receivable
Rabia S.
The Shelby Gaming Manufacturing Company has experienced a severe cash squeeze and needs $200,000 over the next 90 days. The company has already pledged its receivables in support of a loan. However, it does have $570,000 in unencumbered inventories. Determine the best financing alternative from the following two that are available. a. The Cody National Bank of Reno will lend against finished goods provided that they are placed in a public warehouse under its control. As the finished goods are released for sale, the loan will be reduced by the proceeds of the sale. The company currently has $300,000 in finished goods inventory and would expect to replace finished goods that are sold out of the warehouse with new finished goods, so that it could borrow the full $200,000 for 90 days. The interest rate will be 10 percent, and the company will pay quarterly warehousing costs of $3,000. Finally, it will experience a reduction in efficiency as a result of this arrangement. Management estimates that the lower efficiency will reduce quarterly before-tax profits by $4,000. b. The Vigorish Finance Company will lend the company the money under a floating lien on all of its inventories. The rate will be 23 percent, but no additional expenses will be incurred.
Adi S.
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Principles of Accounting Volume 1: Financial Accounting
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