What is equipment lease? What are its essential elements?

Answer
Equipment leasing =) Equipment Leasing is an excellent way to grow your business without significant out of pocket expenses. Leasing offers real advantages including better value, more convenience and greater control. In most cases, the full amount of the equipment, as well as the service, shipping, installation costs and maintenance can be included in the lease. This spreads the cost out evenly over the term of the lease freeing up your money to work harder for you. Currently, 35% of all equipment is leased.
Types of Equipment Leases
The two primary types of leases are:
1) operating leases -) Operating leases are characterized by short-term, cancelable terms, and the lessor bears the risk of obsolescence. These leases are generally preferable when the company needing the equipment needs it only for a short period of time. Under the usual terms of such agreements, a lessee can usually cancel an operating lease, assuming prior notice, without a major penalty.
2) long-term leases -) Long-term, noncancelable leases, which are also known as capital, full payout, or financial leases, are sources of financing for assets the lessee company wants to acquire and use for longer periods of time.
Most financial leases are net leases, meaning that the lessee is responsible for maintaining and insuring the asset and paying all property taxes, if applicable. Financial leases are often used by businesses for expensive capital equipment.
Elements of Equipment Leasing
1.Duration of the lease
2.Total rate or lease payment due the lessor
3.Specific financial terms (date of the month that payment is due, penalties for late payment, etc.)
4.Residual values and purchase options
5.Market value of equipment (necessary for insurance purposes in the event of lost or damaged equipment)
6.Tax responsibility
7.Equipment updating or cancellation provisions
8.Lessee renewal options
9.Penalties for early cancellation without good cause
10.Miscellaneous options (security deposits, warranties)

What are the features of trade credit as a short-term source of Working Capital Finance?

Answer
Features of Trade Credit
Trade credit refers to the credit extended by the supplier of goods and services in the normal course of transaction/business/sale of the firm. According to trade practices, cash is not paid immediately for purchases but after an agreed period of time. Thus, deferral of payment (trade credit) represents a source of finance for credit purchases.
There is, however, no formal/specific negotiation for trade credit. It is an informal arrangement between the buyer and the seller. There are no legal instruments/acknowledgements of debt which are granted on an open account basis. Such credit appears in the records of the buyer of goods as sundry creditors/accounts payable.
A variant of accounts payable is bills/notes payable. unlike the open account nature of accounts payable, bills/notes payable represent documentary evidence of credit purchases and a formal acknowledgement of obligation to pay for credit purchases on a specified (maturity) date falling which legal/penal action for recovery will follow. A notable feature of bills/notes payable is that they can be rediscounted and the seller does not necessarily have to hold it till maturity to receive payment. However, it creates a legally enforceable obligation on the buyer of goods to pay on maturity whereas the accounts payable have more flexible payment obligations. Although most of the trade credit is open account as accounts payable, the suppliers of goods do not extend credit indiscriminately. Their decision whether or not to extend the trade credit as well as the quantum is based on a consideration of factors such as earnings record over a period of time, liquidity position of the firm and past record of payment.
Advantages
Trade credit, as a source of short-term/working capital finance, has certain advantages. It is easily almost automatically, available. Moreover, it is a flexible and spontaneous source of finance. The availability and magnitude of trade credit is related to the size of operations of the firm in terms of sales/purchases.

What are the objectives of cash management?

Answer
"Cash Management" =) Cash management is a broad term that refers to the collection, concentration, and disbursement of cash. It encompasses a company's level of liquidity, its management of cash balance, and its short-term investment strategies. In some ways, managing cash flow is the most important job of business managers. If at any time a company fails to pay an obligation when it is due because of the lack of cash, the company is insolvent. Insolvency is the primary reason firms go bankrupt. Obviously, the prospect of such a dire consequence should compel companies to manage their cash with care. Moreover, efficient cash management means more than just preventing bankruptcy. It improves the profitability and reduces the risk to which the firm is exposed.
Objective of cash management
1) To make Payment According to Payment Schedule:-
Firm needs cash to meet its routine expenses including wages, salary, taxes etc.
Following are main advantages of adequate cash-
a)To prevent firm from being insolvent.
b)The relation of firm with bank does not deteriorate.
c)Contingencies can be met easily.
d)It helps firm to maintain good relation’s with suppliers.
(2) To minimise Cash Balance:-
The second objective of cash management is to minimise cash balance. Excessive amount of cash balance helps in quicker payments, but excessive cash may remain unused & reduces profitability of business. Contrarily, when cash available with firm is less, firm is unable to pay its liabilities in time. Therefore optimum level of cash should be maintain.

What are the objectives of inventory management?

Answer.
"Inventory Management" =) Inventory management is the active control program which allows the management of sales, purchases and payments.
Inventory management software helps create invoices, purchase orders, receiving lists, payment receipts and can print bar coded labels. An inventory management software system configured to your warehouse, retail or product line will help to create revenue for your company. The Inventory Management will control operating costs and provide better understanding. We are your source for inventory management information, inventory management software and tools.
objective of inventory management
1.Protect your company against theft - Make sure that the only people in your warehouse belong in your warehouse. Pilferage is a larger problem than most distributors realize.
2.Establish an approved stock list for each warehouse - Most dead inventory is "D.O.A" (dead on arrival). Order only the amount of non-stock or special order items that your customer has committed to buy. Before adding an item to inventory, try to get a purchase commitment from your customer. If this is not possible, inform the salesperson who requests the item that he or she is personally responsible for half the carrying cost of any part of the initial shipment that isn't sold within nine months.
3.Assign and use bin locations - Assign primary and surplus bin locations for every stocked item. All picking and receiving documents should list the primary bin location (in either characters or a bar code). With correct bin locations on documents, order picking is probably the least complicated job in your warehouse. Assign inexperienced people to this task and your most experienced warehouse workers to receiving inventory and stock management.
4.Record all material leaving your warehouse - There should be appropriate paperwork for every type of stock withdrawal. Under no circumstances should material leave the warehouse without being entered in the computer. Eliminate "no charge/no paperwork" material swaps. Product samples should be charged to a salesperson's account until they are either returned to stock or charged to the customer.
5.Process paperwork in a timely manner - All printed picking documents should be filled by the end of the day. Stock receipts should be put away and entered in the computer system within 24 hours of arrival.
6.Set appropriate objectives for your buyers - Buyers should be judged and rewarded based on the customer service level, inventory turns, and return on investment for the product lines for which they are responsible.
7.Ensure that stock balances are accurate and will remain accurate - Implement a comprehensive cycle counting program. A good cycle counting program can replace your traditional year-end physical inventory.