Assets 10. pledged

Loan 9. receivable

Collateral 8. bonds

Seize 7. accounts

Confident 6. secured

IX. Fill in the blanks with the most appropriate words from the list.

Inventory Loans

VIII. Fill in the blanks with prepositions.

A firm's inventory may be a sufficiently valuable asset to act as collateral.... a loan. When a loan is made with inventory as collateral, the lender lends the borrower some portion.... the stated value of the inventory.

The attractiveness of inventory as collateral for a loan depends.... how much real security it gives for the loan amount. If the inventory can be converted.... cash easily, it is relatively more valuable as collateral. In general, a firm's work-in-process inventory is the most difficult to convert to cash and thus least valuable as collateral. Boxes full.... expensive, partially completed lenses for eyeglasses, for example, are of little value on the open market. Inventory that is easily transported makes better collateral than inventory that is difficult to move. Finally, inventory that is easily identified and controlled also makes better collateral. One thousand crates of canned tomatoes that are tagged and isolated.... other foods would be better collateral than one thousand boxes of assorted canned goods.

The main drawback with inventory as collateral arises when the borrower is a relatively poor credit risk. One bank lent money.... a salad dressing firm using drums of salad oil as collateral. When the firm defaulted.... its loan, the bank found to its chagrin that the drums contained mostly water with oil only on the top - the inventory collateral had disappeared!

Accounts receivable can be used as collateral for a...., a process called pledging accounts receivable. In the event of nonpayment, the lender may.... the receivables. If these assets are not enough to cover the loan, the borrower must make up the difference.

Not all lenders will accept a firm's accounts.... as collateral. Those who do are typically financial institutions with credit departments capable of evaluating the quality of the firm's receivables. Only if the lender is.... that the risk of the firm's debtors' not paying is acceptably low will the loan be granted.

Using accounts receivable as.... is especially important to service companies such as accounting firms and law offices. These firms do not have inventories to offer as collateral Accounts receivable are their main sources of collateral for getting.... loans.

Most businesses have other types of assets that can be.... as collateral. A few businesses own marketable securities, such as stocks or.... of other companies, that can serve as collateral. Many more own fixed assets such as land, buildings, and equipment that can be used as collateral. But fixed.... are usually used to secure long-term -not short-term - loans. It is easy to see, then, why most short-term business borrowing is secured by.... receivable and inventories.

Дата добавления: 2015-01-03