4 Flashcards by Chloe Hazeltine

What does CAMPARI stand for?

Character, 
Ability, 
Margin, 
Purpose, 
Amount, 
Repayment & 
Insurance.

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What is an example of a countercyclical business?

Repair goods business

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What is a noncyclical business?

Somethjng that trades in necessities. I.e food, water.

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What is working capital?

The difference between current assets and current liabilities. Also known as net current assets

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Give an example of current assets?

Stock, cash, debtors

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Give an example of current liabilites

Creditors, short term borrowing

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What is trade credit?

Provided by suppliers over the period of the goods

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What are trade debtors?

Monies to be received from customers of the business

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What is the least liquid working capital/ current assets?

Stock

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What is a cyclical business?

Mirrors trends in the economy - building Industry first to suffer

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What is contract farming?

Agricultural joint venture. Farmer secures services of contractor or neighbour to farm his unit.

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What is an example of a short trading cycle?

Sellingn fresh fish daily

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What are the key principles of lending?

People/ character
Purpose/ amount
Repayment capability/ terms
Security
Remuneration/ margin

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What is the cheapest means of borrowing?

Overdraft

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What is an overdraft suitable for?

Short term borrowing - i.e purchase of stock

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What are two main types of leases?

Operating lease + finance lease

What is the difference between operating lease and finance lease?

Operating is short term and used for small items.

Finance lease - the company excepts full cost to be recovered at the end but is cheaper.

What are 5 Typical securities?

Property
Floating charges
Guarantees
Life policies 
Stocks and shares

What is invoice discounting?

Bank pays invoice, when client gets funds from debtors they pay the bank.

Invoice discounting- What is provision finance?

Factor will advance 80% immediately. Remaining 20% minus charges is paid when the invoice has been paid.

Invoice discounting- what is Sales ledger administration?

Dispatches invoices and ensures that they have been paid. Includes record keeping.

Invoice discounting- what is credit management?

Provides insurance against bad debt

What are specialised areas that require specialised lending?

Property developers
Farming
Finance
Acquistion finance

When assessing a proposal from builders and property developers what should you consider?

The track record and reputation of the builder of developer

What is an important criterian when assessing a proposal from a farmer?

The farming policy being adopted

What are landbanks?

Areas or plots purchased by developers for future developments.

What is a management buyout?

Mangement of a business aquires a substantial stake and effectively takes control of the business

When do mangement buyouts arise?

Parent company decides to divest a subsidiary for strategic reasons.

Why are economic conditions considered when assessing a lending proposal?

Nearly all businesses are effected by economic cycles.

What is working capital?

The difference between current assets and current liabilities.

When assessing a proposal from builders and property developers what should you consider?

The track record and reputation of the builder or developer

Which one is an important criterian when assessing a proposal from a farmer.

The farming policy being adopted

Mock Shareholders' funds in a bank's balance sheet can be considered to be what?

A safety cushion which protects the depositors in the bank

Mock Most banks use mnemonics to assist staff with their lending. Why?

To help staff remember the fundamentals of good lending