Commercial paper, Managerial Accounting

Assignment Help:

The CP introduced in the Indian financial market, for the recommendations of the Vaghul Committee has turn into a well-liked debt instrument of the corporate world. Commercial Paper is a debt instrument for short-term borrowing that enables highly rated corporate borrowers to vary their sources of short-term borrowings and gives an additional financial instrument to investors along with a freely negotiable interest rate. The maturity period ranges from three months to less than a year. As this is a short-term debt, the issuing company is needed to meet dealers' fees, rating agency fees and another relevant charge. CP is short-term unsecured promissory note issued through corporations along with high credit ratings.

Salient Features:

Eligibility Criteria: A company can concern CP only whether:

1) CPs tangible net worth is not less than Rs. 4 crore according to the latest audited balance sheet;

2) CPs fund based working capital limit is not less than Rs. 4 crore;

3) This has acquired the identified minimum credit rating for issuance of commercial paper from an approved credit rating agency. That credit rating must not be more than 2 months old at the time of issue of the commercial paper;

4) CPs borrowal account is classified by 'standard' through the financing bank; and

5) This has a minimum current ratio of 1.33:1 according to the latest audited balance sheet and the classification of current liabilities and assets are in conformity along with the Reserve Bank guidelines issued by time to time.


Related Discussions:- Commercial paper

Include specific technologies to support your point, Winner says, "It is cl...

Winner says, "It is clear that in decades to come a great many things like telephone answer machines and automatic bank tellers will become, in effect, members of our society." Mor

Financial manager''s role in inventory management, Financial manager's role...

Financial manager's role in inventory management The techniques of inventory management are very useful in determining the optimum level of inventory and finding answers to the

Cost classifications, How do the different cost classifications can assist ...

How do the different cost classifications can assist the management

Explain out of pocket cost, Explain Out of pocket cost A cost which wil...

Explain Out of pocket cost A cost which will have to be paid to outsides as against cross such as depreciation, which do not require any cash payment this cost is relevant in t

Quadratic loss function, Consider the following quality data for three diff...

Consider the following quality data for three different manufacturers of automobile weather-strips: Weather-strip Bulb Dimension Specification y=20 +or- 4mm

Bulk agency factoring, Bulk Agency Factoring : In this category factorin...

Bulk Agency Factoring : In this category factoring is essentially used as a method of financing book debts. In this sort of factoring the client continues to administer credit a

Asset securitisation, The emerging financial scenario has made a fierce com...

The emerging financial scenario has made a fierce competition among the companies to raise funds by innovative financial products by the capital and or money markets. Moreover sour

Estimate the labor cost, The Knapp Company needs to predict the labor cost ...

The Knapp Company needs to predict the labor cost in producing small carrot patch dolls. The following production information is available: Year Dolls Pr

Prepare two tables showing net profit, Prepare two tables showing net profi...

Prepare two tables showing net profit, residual income and return on investment for each year of the project and also net present value (NPV) for: (i) The BEST OUTCOME; (ii) The

Example of cash discount, M/s ABC's present credit terms are 1/10 net 30 th...

M/s ABC's present credit terms are 1/10 net 30 that they are planning to change to 2/10 net 30.  The current average collection period is 20 days and the variable cost to sales rat

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd