Consideration from Decision of Companies Loans
Aionsite.com – A company would not be separated from the borrowing and lending, the bigger a company then the loan will be greater, its commonplace, because without daring to make a loan, then the chance for success will be narrowed, but with too many loans, then the companies chance to go bankrupt will be more broadly.
It’s a confusing thing, but there are some considerations that need to be noticed by a company that the company could manage the company finances well and wisely.
If some company takes loan / debt in a long time, then the company will be more safely, because the risk of the company, to endure bankruptcy will be smaller, but the cost interest will be greater.
Term structure of funding
Hedging approach is a strategy of each asset financing, with a period approximately equal to the rotation period of the assets into cash. This approach is based on the matching principle which states that funding should be adjusted by how long the funds needed.
Conclusion
The company funding that acquired from the loan / debt, both in the short time frame, medium, or long period of time. It was also depending from the small or big of company activity.
Consideration to be taken to make the debt is not only based on needs of the company, but should be based on the risk of loss or bankruptcy that will be experienced after performing loans / debt.
Loan or Debt Structure
Aionsite.com- Debt structure describes about a composition term debt used by companies, short, medium or long term, and is influenced by the size of the debt.
Types of debt include:
- Short-Term Debt
- Medium-Term Debt
- Long-Term Debt
Short-Term Debt
The funding sources of short-term debt are grouped into:
1. Passive decision variables, number of sources of funds will depend on the decision in accordance with another aspect of corporate activity. For example: the purchase of raw materials on credit, accruals accounts.
2. Variable Active Decisions, a company must actively seek and obtain financial resources and the need to acquire it has formal agreements to the Creditor. For example: Bank debt.
Medium-Term Debt
On this type of debt, debt is usually repaid when the assets are funded with debt is no longer required. However, payment is usually also done regularly. The benefit of this debt is that debt can be tailored to the willingness of the cash flow to pay off the debt.
Long-Term Debt
Generally, long-term debt has approximately more than 5 years, and some even thought that this loan has a term of 10 years.
Long-term debt related to capital structure. When a company borrows funds and return in a relatively long period of time, then the loan / debt will be part of the capital structure of enterprises. Long-term debt is also formed as a result of renewed loans / short-term debt and medium term debt it is seen on the basis of the debt payment period. The types of long-term debt, among others: Obligation, and Investment Credit.
Operating Budget and Financial Budget (Forecasting Budget)
Aionsite.com – Forecasting Budget is a budget that contains estimates of the company’s activities within a certain period to come, and contains estimates about the state or the company’s financial position at the time to come.
Budget is classified into two, namely:
- Operating Budget
- Financial Budget
Operating Budget
The company’s activity during this period includes two sectors:
1. Income sector (Revenues)
- Sub-sectors of primary income
- Sub-sectors of Non primary income
2. Costs sector (Expenses)
- Sub-sectors of primary costs include the cost of the factory, administrative costs, and cost of sales.
- Sub-sector non primary costs.
Financial Budget
Financial budget is an activity, to plan on the company’s financial position at a certain time to come, while those intended by the company’s financial position is a state of Assets, Debt and Equity Company at a time.
The stages of operating budget preparation
- The first alternative, the amount of sales is determined by the size production.
- The second alternative, the amount of production would be determined by the amount of sales.
The stages of financial budget preparation
- If the company will set up the Financial Budget, must pay attention and consider the purse of operating budget or the operating budget should be drafted earlier than the financial budget.