business finance

• Specific: to know exactly what the goals are and create a plan designed to achieve those goals
• Measurable: with a specific amount
• Attainable: providing the basis for the personal financial activities that must be done
• Relevant: involving goals based on the individual’s income and real-life situation
• Time-based: indicating a time for achieving the goal. This allows the individual to measure his/her progress towards financial goals
• A loan is a money lent at an interest rate for a certain period of time. Loans are normally secured from different financial institutions, and the most common are banks.
• A bond is also a form of a loan but can be traded through Philippine Dealing and Exchange (PDEX)System.
• Risk - If there is any uncertainty or risk associated with the cash flow in the future, people will think it is better to spend their money now.
• Inflation - When there is inflation, the value of the currency decreases over time. The greater the inflation, the greater the difference in value between a peso today and a peso tomorrow.
• consumption - Individuals prefer present consumption to future consumption. There needs to be a strong incentive to convince people to give up present consumption for future consumption. For example, a businessman would be willing to deposit money if he is assured that it will bring a higher interest.
• Bank credit is the banking system's borrowing capacity provided to an individual/business.
• 5cs-Capital,Character,Collateral, Capacity, Conditions
• Conditions - These refer to the intended purpose of the loan. The loan size in relation to the specific use will help the lender evaluate your loan request. Conditions also include the national, industry, and local economic situation. An unstable economic situation may negatively affect a loan application.
• Capacity - Lenders need to determine if borrowers can comfortably afford the payments. The borrower's income and employment history are good indicators of the borrower's ability to pay outstanding debt. Income amount, job stability, and type of income may also be considered. The debt to income ratio of the borrower may be evaluated. This particular ratio compares debts to the before-tax-income.
• Collateral - Secured loans require collateral, which the borrower owns that will guarantee payment. It assures the lender that the lender can obtain the collateral if the borrower does not pay the loan. The value of the collateral will be evaluated, and any existing debt secured by the collateral will be subtracted from the value.
• Character - This is sometimes known as credit history. It refers to the borrower's reputation or track record for repaying debts. A person's character can be seen in the credit history and the lenders that have extended credit to them, the amount of credit they have, and their payment history.
• Capital - It is the money invested in the business and indicates how much is at risk if the business fails. Capital also represents the savings, investments, and other assets that can help repay the loan.
• SMART MEANING