Archive for the ‘online bank’ Category
Fallen Angels and crossover credits
Saturday, November 21st, 2009
Fallen Angels and crossover credits are often targeted by alternative investor groups like hedge funds and risk arbitrageurs who speculate on the mispricing between the various financing instruments of a company.
Characteristics of Fallen Angels:
- High leverage in respect to operating cash flows
- Weak industry trends lead to low and unpredictable operating cash flows
- A further deterioration of the operating performance is not sustainable with the financial profile
- Loss of market share
- Not enough liquidity to support the ongoing business
- Decreasing asset quality
- Management is unable to identify profitable business units
- Weak and complex debt structure
- Unfavorable regulatory environment and lack of support by the government (mainly for European companies)
Tags: Aids finance, Debt, economics, estate, Estate Planning, heir, income, inheritace, insurance, Interest, joit, last will, Market, market cycle, rate, tenancy
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The correlation between the debt and equity markets
Monday, October 26th, 2009
The correlation between the debt and equity markets’ measures of risk has been extremely strong over the recent years. External shocks, for example the tragic events of September 11, 2001, the LTCM disaster in 1998 or the Asian crisis, have a substantial impact on credit spreads as well as on implied equity volatility. Consider the relationship between implied volatility of call options on Dow Jones Euro Stoxx 50, and the spread versus government bonds of the MSCI Euro corporate bond index.
One way of interpreting implied volatility on an equity index is as the compensation that the investors receive for taking on equity risk. The index of credit spreads represents the additional yield investors demand for holding corporate debt over benchmark government debt. While there have at times been brief periods of divergence, these two risk measures typically move together. For example, in 1993/94 banks in the United States cleaned up their balance sheets by writing down nonperforming assets, causing the VIX index, representing the implied volatility of put and call options on the S&P 100, to fall to a historical low just above 10 percent. The decline in implied equity volatility triggered a credit spread rally. Asimilar thing happened in 2002. Average credit spreads collapsed by half, as did optionimplied volatility. So the decline in volatility was a major driver of credit spread tightening. However, one tends to find that when implied volatility falls below a certain threshold the effect of small changes on spreads is rather subdued.
Tags: business, crisis, finances, foreclosure, investments, loans, money advice, money problems, stock, stock exchange
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A Good Reason to Have a Business Plan – part 1
Monday, August 3rd, 2009
A business plan helps you achieve your goals. It also helps discipline the way you think about what you’re doing. But business plans have another important purpose.
Companies need business plans to apply for loans, grants, or other forms of funding to start or expand the business. Lenders and financial managers like to see something in writing that shows a firm is committed to its objectives and knows how it’s going to accomplish those objectives. Without a plan, serious outside funding—or any funding, for that matter— might not be available. After all, if you were in the business of investing money, how would you select the companies that would be the best risks?
But that means you need to write your business plan in different ways for different financial participants:
Plans used to attract equity investors—financial partners who will prosper as the business prospers—must be written to show how investors will gain from the company’s success. Investors expect a high rate of return, so they will be looking at growth and profit projections. Plans that project a successful profile are what equity investors are seeking.
Plans designed to appeal to lenders must demonstrate methodologies for repaying loans. At the risk of being simplistic, lenders have little financial stake in the success or failure of the company. They’re interested in how the company plans to repay the principle and its interest. And lenders are more likely than equity investors to be
concerned about cash flow. Your business plan should provide a timetable with repayment amounts the lenders believe your company will be able to make.
Tags: benchmark, business plans, marketing schedule, methodology, sales
Posted in developers, equity, expenses, innovative marketing, loans, online bank | Comments Off
When and How to Cut Costs – part 1
Friday, July 31st, 2009
If cash flow does become an issue, it’s obvious that the company will have to change the way it’s doing business if
it wants to survive. Does that executive plant service still come in once a week to water the ficus and all the other office flora? As a manager, you may have to cancel the service, buy a $2.98 watering can, and start doing it yourself—or maybe just get rid of the plants altogether.
That may seem a little obvious, but it’s amazing how many businesses fall into comfortable patterns during good times and don’t see them as unnecessary frills when cash becomes tight.
Tags: cash dynamics, cutting costs, payment plans, preserving cash
Posted in business patterns, cash demand, customer demand, developers, online bank | Comments Off
How to Plan a Cash Flow – part 2
Friday, July 31st, 2009
Beware of rapid growth. Many J companies have grown so fast that demand has outstripped their ability to pay for increasing inventory or improved services to meet the demand. Remember that demand is not cash. A company should not borrow too much on the expectation that, when it meets demand, it can repay the loans.
Preserving cash flow is one thing and improving market strategies is another. But sometimes the two can work hand-in-hand for even greater benefit. All it requires is a little better management thinking and a clear understanding of the challenges you face.
Tags: cash dynamics, contingency, payment plans, preserving cash
Posted in cash demand, companies, merchandise, online bank, taxes | Comments Off
What Is Cash Flow?- part 1
Wednesday, July 29th, 2009
First and foremost, cash flow is not the profit you make from sales or the difference between expenses and revenue. Cash flow is the flow of money in and out of a business. That’s all.
Cash is accounted for as an asset, and there are a lot more challenges related to cash flow than accounting provides. Fortunately, there are also solutions, or at least strategies, to maximize the inflow and minimize the outflow.
Keep in mind Maxim 1 of modern business:
Everything a business does takes longer and costs more than managers could possibly anticipate even in their most liberal scenario. Adjust your thinking accordingly.
What is cmhl For the sake of this discussion, consider it the company’s most valuable asset, the one you need to protect with all your might.
Tags: cash flow, profit, sales
Posted in accounting, global market, loans, online bank, payments | Comments Off
Controlling the Cash Flow – part 2
Wednesday, July 29th, 2009
At one point product sales may be brisk and revenues over cost of goods sizable. There is no problem there. Then suddenly demand will pick up and costs will escalate—a by-product of needing more of everything to increase production and keep up with increased demand. Just about that time, a major creditor will run into a snag and will have to slow up payments.
Suddenly the company is caught in a cash crunch—more money is going out than is coming in when it’s needed. Then the company doesn’t have the capital it needs to help meet customer demand. Despite having a highly profitable profile on paper, the company isn’t receiving funds in the timely manner that it needs to pay its bills. Think of it like this: You just ordered a new car because you won $25,000 in the lottery. The dealer wants the money, but the lottery officials just told you that they can’t send the check for three months. Uh-oh.
Cash flow problems happen to all of us from time to time. If you plan sufficiently, you may avoid many of those rapids, but not all.
At one point product sales may be brisk and revenues over cost of goods sizable. There is no problem there. Then suddenly demand will pick up and costs will escalate—a by-product of needing more of everything to increase production and keep up with increased demand. Just about that time, a major creditor will run into a snag and will have to slow up payments.
Suddenly the company is caught in a cash crunch—more money is going out than is coming in when it’s needed. Then the company doesn’t have the capital it needs to help meet customer demand. Despite having a highly profitable profile on paper, the company isn’t receiving funds in the timely manner that it needs to pay its bills. Think of it like this: You just ordered a new car because you won $25,000 in the lottery. The dealer wants the money, but the lottery officials just told you that they can’t send the check for three months. Uh-oh.
Cash flow problems happen to all of us from time to time. If you plan sufficiently, you may avoid many of those rapids, but not all.
Tags: bank payment, cash flow, floats, management
Posted in customer demand, money spending, online bank, payments, real estate | Comments Off
Controlling the Cash Flow – part 1
Wednesday, July 29th, 2009
Managing the finances of a business is not as easy as simply making sure your department or company always has more money than it spends. Business assets—of which cash is just one small part—are as prone to change as any other aspect of business. Planning for all business contingencies is part of the management equation, it’s critical to your role as a nonfinancial manager and the success of your department.
As long as there are businesses, cash availability will continue to be a problem for all of the people some of the time and some of the people all of the time. (Although the latter group does not stay in business very long.)
Tags: bank payment, floats, management
Posted in money spending, online bank, payments, taxes | Comments Off
How to Manage Disbursement Options – part 2
Wednesday, July 29th, 2009
Balance reporting simply refers to checking company accounts via direct online access to the bank’s records using a personal computer. Similar in technique to presentment accounts, automated balance reporting allows direct access to information and gives your accountant the ability to deposit just as much money into the payment account as necessary and no more.
Sweep accounts are perhaps the simplest to understand and yet the most profitable of the three techniques. The bank simply reviews all active company accounts at the end of each business day and sweeps excess funds not used to satisfy payment needs into interest-bearing accounts in an overnight deposit. The next day those funds can be redeposited to satisfy more payments, if need be, or additional funds can be deposited. That night, the bank again sweeps the account and the interest grows.
The key point for you to remember is that A/11 can be a key financial management tool for your company. Understanding how that works and why will help you contribute more effectively to your company’s overall financial growth and prosperity.
Balance reporting simply refers to checking company accounts via direct online access to the bank’s records using a personal computer. Similar in technique to presentment accounts, automated balance reporting allows direct access to information and gives your accountant the ability to deposit just as much money into the payment account as necessary and no more.
Sweep accounts are perhaps the simplest to understand and yet the most profitable of the three techniques. The bank simply reviews all active company accounts at the end of each business day and sweeps excess funds not used to satisfy payment needs into interest-bearing accounts in an overnight deposit. The next day those funds can be redeposited to satisfy more payments, if need be, or additional funds can be deposited. That night, the bank again sweeps the account and the interest grows.
The key point for you to remember is that A/11 can be a key financial management tool for your company. Understanding how that works and why will help you contribute more effectively to your company’s overall financial growth and prosperity.
Posted in finances, global market, online bank, payments | Comments Off