--%>

Why banks make short-term or self-liquidating loans

Banks desire to make short-term, self-liquidating loans to businesses. Why?

Banks desire to be able to illustrate where the funds are likely to come from such that the borrower is capable to employ to make the required loan payments. Short term, self-liquidating loans do this as the borrowed funds are utilized to purchase assets that produce the needed funds.

 

   Related Questions in Finance Basics

  • Q : Working capital what are the advantages

    what are the advantages and disadvantages of working capital source of finance

  • Q : Describe the role of cash and of

    Describe the role of cash and of earnings while a corporation is deciding how much, if any, cash dividends to pay to common stockholders. In the long-run earnings are essential to maintain dividend payments; however at the time an actual dividen

  • Q : Microeconomics or macroeconomics Denote

    Denote whether each of statements applies to microeconomics or macroeconomics: a. In Canada, the unemployment rate was 7.0 percent in January 2005. b. A Canadian software firm d

  • Q : Describe sunk cost Describe sunk cost?

    Describe sunk cost? Is it relevant while evaluating a proposed capital budgeting project? Describe. A sunk cost is a cash flow which has already occurred, or that will take place, whether a project is accepted or discarded. It is irrelevant wh

  • Q : Gateways for biometric The different

    The different Gateways for biometric are as following: Transaction security: this is to secure customers transactions and so to protect their privacy both remotely and onsite.

  • Q : What is Budget Change Proposal Budget

    Budget Change Proposal (BCP): It is a proposal to modify the level of service or funding sources for activities sanctioned by the Legislature, suggest new program activities not presently authorized, or to remove existing programs.

    Q : State statement of cash flows State

    State three major sections of the statement of cash flows? Cash flows from investing activities Cash flows from Operations Cash flows from financing activities Net change in cash balance Cash balance at beginning of period

  • Q : Define Limited-Term Position

    Limited-Term Position (LT): Any place that has been authorized only for a particular length of time with a set termination date.Limited-term positions might be authorized throughout the budget procedure or in transactions approved by the D

  • Q : Explain Object of Expenditure Object of

    Object of Expenditure (Objects): It is a categorization of expenditures based on the kind of goods or services received. For illustration, the budget group of Personal Services comprises the objects of Salaries and Wages and Staff Benefits.

  • Q : Describe price–quantity effects Normal

    Normal 0 false false