Question

What is a sinking fund bond?

What is a secured bond?

When would a company exercise their call on a callable bond?

How do you calculate working capital and current ratio?

Why might a company choose to issue a bond instead of issuing stock?

Answer 1

part 1. Sinking Fund bond: This requires bondholders to set aside certain amounts of assets on a certain date to repay. If the issuer is unable to pay the bond holders in the next period, such a fund would need to create a sinking fund. A sinking fund is a fund that is created to repay a loan. The account owner is constantly setting aside a certain amount and uses that money for a specific purpose.

part 2. Secured bond: A secured bond is a secured loan secured by the issuer's fixed assets, which appears to be a form of collateral on the loan. By default, the bond passes the name of the issuing asset to the bondholders. Secured bonds can also be secured with the cost of revenue coming from the project, which is used to finance the bond issue.

Secured bonds seem to be less risky than unsecured securities, as investors receive some degree of compensation for their investments.

part 3. Callable bonds in a company are bonds with a fixed amount in which the issuing company has the right to repay the security value at the pre-agreed receivable price before the bond expires.

part 4: Working capital refers to a company's ability to pay its current liabilities with current assets. Working capital is an important part of financial support because the creditor can measure the company's ability to pay its debt within a year.

Working capital is the difference between a company's current assets, such as cash, unpaid bills of consumers, and existing liabilities between raw materials and manufactured goods. In many cases this calculation seems to be the same.

Current Ratio Business quarterly and annual financial results reports are calculated using two standard statistics that are available in the company's balance sheet - current assets and current liabilities.