Fixed and a Floating charge



Fixed and a Floating Charge

Debt

A good rule of management is to balance expenditures and revenues. The use of debt by borrowing can finance investments while maintaining consistent rule. To address various conflicts that arise between lenders and borrowers, debts are governed by the law. The laws governing the terms of a debt are different depending on the lender and /or the borrower. The IOU is a written document by which a person, called debtor , acknowledges owing a sum of money to another person, called a creditor. When a person lends money to another it is best to have proof of that loan. Certain terms are mandatory and must be included in this paper.

Companies may use debt to finance their operations if they do not have enough capital or simply as tools of management. From the perspective of financial management, there are often debts depending on their due, ranging from short-term debts to debts of medium and long term.

The debts of the medium to long term are often incurred to finance the investment cycle, while the short-term debt finance the operational cycle.

We distinguish among others:

Current liabilities of operations - mainly suppliers' credits,

Current liabilities Non-operating - corporation tax to pay in taxes, social contributions payable to URSSAF, advances received on contracts ...

Current liabilities Bank, granted by financial partners,

Medium-term debt or long term:

bank loans,

In the European framework for public institutions to industrial and commercial nature (EPIC) whose activities fall within the competitive sector, the possibilities of intervention of the state are again limited. Similarly, under the rules of international trade, companies can not be maintained on life's financial state.

A private company is in a state of insolvency that is subject to a procedure of bankruptcy under the Commercial Code, if there is obviously no possibility of rehabilitation, liquidation , and hence in this case continues to exist. Contrary to the States or individuals, a business can disappear. To avoid this end, private companies (but this also applies to public companies) use various strategies: reducing costs by streamlining production systems, abandonment of unprofitable branches which are liquidated or outsourced , asset sales non-strategic (real estate) or recapitalization by shareholders.

The public enterprises to private status ( limited companies ) can in principle be made bankrupt if the state decides not to give them the benefit of government subsidies or by purely budgetary decision, either pursuant to European standards (to avoid distortions ofcompetition ). Some companies or private law must also have had to cope with huge debts made by banks, which burden their profitability for several years.

In recent years, many hundreds of companies took over by private equity firms. But why venture capitalists who finance acquisitions with so much debt? The answer is simple. It is fiscally attractive than equity. Interest on debt because of the tax may be deducted, while this is not the case with dividends on shares. Another important advantage is that as making full use of the so-called financial ...