Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Financial Management Expert

Problem:

Superstores Ltd is engaged in the import and distribution of kitchen wares in Mauritius and also for the regional countries. Goods are imported on open account and collection basis. The goods that are re-exported to the region are under documentary credit.

Recently the main supplier (exporter) of kitchen wares contacted Superstores Ltd to inform them that trade has to be done only on documentary credit terms/ letters of credit.

This will impact on Superstores’ banking facility and has contacted you, as their banker, to advise them on the way forward. During the meeting, the following problems have been set and you are requested to give answers to clarify their doubts.

Towards the end of the meeting, the finance manager of Superstores informs you that they have already reached their limit in terms on banking facilities with their banks and they cannot request any further increase.

problem1. describe the following terms used in Trade Finance:

(i) Open account;

(ii) Documentary collections;

(iii) Incoterms;

(iv) Avalised bill of exchange;

(v) Charter Party bill of Lading.

problem2. How do you think the change from import under documentary collections to documentary credit will affect the company’s banking facilities?

problem3. Using separate diagrams/ flow charts show how Letter of Credit and documentary collection operate.

problem4. Taking into account the restraint in terms of banking facilities, how would you advise the company to operate so as to be able to open letters of credit in favour of their suppliers and at the same time not to request additional banking facilities?

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M96332

Have any Question? 


Related Questions in Financial Management

Analyze how well a company adapts to international

Analyze how well a company adapts to international audiences. Choose a large, global company and explore their website. Do you find multiple versions of the company's site for different countries? In what ways does the c ...

Suppose a stock just paid a dividend of 3 and is expected

Suppose a stock just paid a dividend of $3 and is expected to grow at a rate of 20% per year for the next two years before falling to a constant growth rate of 6%. If the required return on the stock is 14%, then what sh ...

Aztec products wishes to evaluate its cash conversion cycle

Aztec Products wishes to evaluate its cash conversion cycle (CCC). One of the firm's financial analysts has discovered that on average the firm holds items in inventory for 65 days, pays its suppliers 35 days after purch ...

Ibms outstanding annual coupon bonds mature in 20 years

IBM's outstanding annual coupon bonds mature in 20 years. Their yield to maturity is 8.5% and their current market price is $955.90. What is the bond's annual coupon rate? A bond has 6 years to maturity, a 9.1% annual co ...

1 one of the key issues in the lesseersquos analysis is the

1. One of the key issues in the lessee’s analysis is the appropriate discount rate. a. What does lessee’s after-tax cost of debt mean? b. When is residual value used? 2. What is a lessor’s analysis? 3. What is a leverage ...

You are looking to buy a car you can afford 560 in monthly

You are looking to buy a car. You can afford $560 in monthly payments for five years. In addition to the loan, you can make a $660 down payment. If interest rates are 10.25 percent APR, what price of car can you afford? ...

Which of the following is an example of vertical

Which of the following is an example of vertical integration? A. A horse farm buys and insurance company B. A television station buys a radio station C. A soap company launches a new line of fragrance-free and hypoallerg ...

The internal rate of return is most reliable when

The internal rate of return is most reliable when evaluating: a) a single project with alternating cash inflows and outflows over several years. b) mutually exclusive projects of differing sizes. c) a single project with ...

Roberto and jessica suarez have a gross income of 53000 a

Roberto and Jessica Suarez have a gross income of $53,000 a year and annual expenses of $51,500 including taxes. Their annual debt payments total $15,000. According to the recommended standards for the debt -to-income ra ...

In april 2009 as part of the stimulus package intended to

In April 2009, as part of the stimulus package intended to fight the recession of 2007-2009, Congress authorized "Build America Bonds," which states and cities could issue to build roads, bridges, and schools. Unlike wit ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen