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Introduction To Business Banking > 4 > Flashcards

4 Flashcards

1
Q

What does CAMPARI stand for?

A 
Character, 
Ability, 
Margin, 
Purpose, 
Amount, 
Repayment & 
Insurance.
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2
Q

What is an example of a countercyclical business?

A

Repair goods business

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3
Q

What is a noncyclical business?

A

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

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4
Q

What is working capital?

A

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

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5
Q

Give an example of current assets?

A

Stock, cash, debtors

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6
Q

Give an example of current liabilites

A

Creditors, short term borrowing

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7
Q

What is trade credit?

A

Provided by suppliers over the period of the goods

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8
Q

What are trade debtors?

A

Monies to be received from customers of the business

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9
Q

What is the least liquid working capital/ current assets?

A

Stock

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10
Q

What is a cyclical business?

A

Mirrors trends in the economy - building Industry first to suffer

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11
Q

What is contract farming?

A

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

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12
Q

What is an example of a short trading cycle?

A

Sellingn fresh fish daily

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13
Q

What are the key principles of lending?

A 
People/ character
Purpose/ amount
Repayment capability/ terms
Security
Remuneration/ margin
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14
Q

What is the cheapest means of borrowing?

A

Overdraft

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15
Q

What is an overdraft suitable for?

A

Short term borrowing - i.e purchase of stock

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16
Q

What are two main types of leases?

A

Operating lease + finance lease

17
Q

What is the difference between operating lease and finance lease?

A

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.

18
Q

What are 5 Typical securities?

A 
Property
Floating charges
Guarantees
Life policies 
Stocks and shares
19
Q

What is invoice discounting?

A

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

20
Q

Invoice discounting- What is provision finance?

A

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

21
Q

Invoice discounting- what is Sales ledger administration?

A

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

22
Q

Invoice discounting- what is credit management?

A

Provides insurance against bad debt

23
Q

What are specialised areas that require specialised lending?

A

Property developers
Farming
Finance
Acquistion finance

24
Q

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

A

The track record and reputation of the builder of developer

25
Q

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

A

The farming policy being adopted

26
Q

What are landbanks?

A

Areas or plots purchased by developers for future developments.

27
Q

What is a management buyout?

A

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

28
Q

When do mangement buyouts arise?

A

Parent company decides to divest a subsidiary for strategic reasons.

29
Q

Why are economic conditions considered when assessing a lending proposal?

A

Nearly all businesses are effected by economic cycles.

30
Q

What is working capital?

A

The difference between current assets and current liabilities.

31
Q

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

A

The track record and reputation of the builder or developer

32
Q

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

A

The farming policy being adopted

33
Q

Mock

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

A

A safety cushion which protects the depositors in the bank

34
Q

Mock

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

A

To help staff remember the fundamentals of good lending

Introduction To Business Banking (6 decks)

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