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PROJECT in FINANCE
Kinds of Credit & Sources of Credit
Submitted by:
JULEVIE F. TABUCO
GINO MITCHEL M. FLORES
MARY FE P. PREMACIO
Submitted to:
BERNARDA M. PANILAGAN, CPA
Retail Credit
is a typical example of consumer credit, which
is held synonymous with one another as with
personal credit. The use which is obtain through
charge account and installment credit.
Replevin
When an article is sold under an installment
contract, and the buyer later fails to live up to his part
of the contract, the seller, in order to protect himself
from loss, has the right to repossess the article.
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TRUTH
IN LENDING ACT
2. Mercantile Credit
A pre-approved amount of money issued by a
bank to a company that can be accessed by the
borrowing company at any time to help meet various
financial obligations. Commercial credit is commonly
used to fund common day-to-day operations and is
often paid back once funds become available.
3. Bank Credit
refers solely to the credit given by commercial
banks to businessmen intended to assist then in the
operation of their business.
A bank credit is the amount of credit available to
a company or individual from the banking system. It
is the aggregate of the amount of funds financial
institutions are willing to provide to an individual or
organization.
A Revolving Credit
A revolving credit is a line of credit where
the customer pays a commitment fee and is then
allowed to use the funds when they are needed. It is
usually used for operating purposes, fluctuating each
month depending on the customer's current cash flow
needs.
is a combination of the charge account and the
installment plan
4. Investment Credit
A business organization for the purchase
of fixed assets or to carry minimum business
operation.
1. Merchandise Credit
Other types of credit where the customer
obtain goods or merchandise in exchange to his
promise to pay them at a later date.
2. Borrowing Money
Besides the pressing necessity of obtaining
goods and services on credit, consumers are likewise
confronted with the need for money which they try to
obtain through borrowing.
According to purpose
1. Agricultural Credit
Those loans which are intended for the
acquisition of fertilizers, pesticides, seedlings, and
any instruments, machinery, and other movable
equipment used in production, processing,
transformation, handling or transportation of
agricultural products.
3. Industrial Credit
Intended for financing the needs of industries
like logging, fishing, manufacturing, and others , and
which involves big amounts of money.
4. Commercial Credit
This type of credit, which is sometimes termed
as a mercantile credit.
According to maturity
1. A short term credit is payable within one year from
the date of acquisition.
2. Medium or intermediate term credit t= ranges from
one year to five years in maturity.
3. Credits which are intended from five years up belong
to the category of a long-term credit.
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2. Retail Store
Easily the biggest source of merchandise credit in
the Philippines is the retail store, more particularly in
sari-sari store.
3. Pawnshops
Pawnshop is the oldest credit institution in China.
In the Philippines , pawn broking is also one of the
oldest credit institutions and had been introduced by
Spanish friars when we re under the Crown of Spain.
BASES OF CREDIT
3.CAPITAL
5. CONDITIONS
economic conditions exert profound effect
upon the grant of loans and credits it may be rightly
mentioned that loans and credit may be extended at
certain times and may be denied at other times.
6. Country
Since, as had been stated time and again, the sale of
goods and services in any part of the world on credit involves
risk, it follows that every factor should be carefully considered
and scrutinized in so far as they affect credit risk.
7. Currency
Not only is the stability of the country of
important an important factor to reckon with in the
consideration of credit risk in international trade
transactions but, equally so is that which pertains to
that of currency. The risk must also be taken into
account.
8. Confidence
Credit is founded on confidence which by far is
the principal C of credit. For any credit transaction to
take place, the business whether he be a seller of
goods or services on credit must have confidence.
B. Financial Statement
A financial statement is a report summarizing the
financial results of an organization on any data or
record. Financial statements of the individual firm are
the most source of financial data.
C. Credit Policy
Credit policies may vary from one business
enterprise to another. One relates to the type of
customers who are to be granted credit. One firm may
be primarily interested in increasing the volume of
sales. It therefore grants credit to all applicants and
runs the risk of some losses. Others take the
extraordinary precautions in granting credit that could
reduce their sales volume.
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1. Credit Terms
Is meant the terms and conditions under which
the credit is granted. It includes the time when
payment must be made discounts, if any will allow for
prompt payment.
2. Credit Period
It refers to the length of time within which the
customer is expected to remit payment in part or in
full. If this period expires before payment has been
made, the account becomes delinquent.
3. Credit Limit
A limit with respect to the amount or value that a
customer can obtain from the firm.
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