PRESENTED BY:

DILKUSHA KHANAM- 1154

FORMS OF ASSET
FINANCING,
SAURABH-2024 LEASING, BOND
YIELD, DURATION,
MODIFIED
JOEL JOSE- 2017 DURATION IN
EXCEL SHEET

SHAIKH AFZAL-2027
 ASSET FINANCING

• ASSET FINANCING REFERS TO THE USE OF A COMPANY’S

BALANCE SHEET ASSETS, INCLUDING SHORT-TERM
INVESTMENTS, INVENTORY AND ACCOUNTS RECEIVABLE, TO
BORROW MONEY OR GET A LOAN.
• THE COMPANY BORROWING THE FUNDS MUST PROVIDE THE
LENDER WITH A SECURITY INTEREST IN THE ASSETS.
 ASSET FINANCING DIFFERS CONSIDERABLY FROM TRADITIONAL FINANCING, AS THE
BORROWING COMPANY OFFERS SOME OF ITS ASSETS TO QUICKLY GET A CASH LOAN.

A TRADITIONAL FINANCING ARRANGEMENT, SUCH AS A PROJECT BASED LOAN

WOULD INVOLVE A LONGER PROCESS INCLUDING BUSINESS PLANNING,
PROJECTIONS AND SO ON.

ASSET FINANCING IS MOST OFTEN USED WHEN A BORROWER NEEDS A SHORT-TERM

CASH LOAN OR WORKING CAPITAL.

IN MOST CASES, THE BORROWING COMPANY USING ASSET FINANCING PLEDGES ITS
ACCOUNTS RECEIVABLE; HOWEVER, THE USE OF INVENTORY ASSETS IN THE
BORROWING PROCESS IS NOT UNCOMMON.
ASSET FINANCE INCLUDES:
EQUIPMENT LEASING
HIRE PURCHASE
FINANCE LEASES
OPERATING LEASES
ASSET REFINANCE

The lender buys the asset you
need, and rents it to you on a
lease.
EQUIPMENT LEASING
That means you have it straight
away, and only need a fraction
of the total amount up front.
Generally, you have to pay the
first month’s rent, spreading
the VAT over the whole period.
At the end of the lease, you can
either continue leasing the
item, buy it outright at an
agreed price (factoring in
money already spent), upgrade
to a new piece of equipment on
a new lease, or simply return it.
HIRE • Hire purchase is a simple way to purchase an
asset and spread the cost over time.
PURCHASE
You pay in instalments, which means the item
appears on your balance sheet, and because
you own the asset you'll be responsible for
maintenance and insurance costs — but you'll
also have full ownership of the item after the
term ends.

A finance lease, or capital
lease, falls somewhere
between hire purchase and
equipment leasing.
FINANCE LEASES
It's a longer-term lease
designed for most of the asset's
life.
You get full use of the asset and
pay for the full value over time,
but don't technically own it —
so it does not appear on your
balance sheet.
That means it's possible to
offset rental costs against profit
and claim VAT — which could
be tax-efficient depending on
your situation.
Operating leases, or contract hires, are a
more familiar form of equipment leasing.

OPERATING
An operating lease is basically a rental
agreement with a set term, and
LEASES
maintenance will normally be handled by
the lease company (or 'lessor').

Like finance leases, an operating lease won't

appear on your balance sheet (which might
confer some tax benefits), but operating
leases can be cheaper because you don't
pay for the full value of the item
 ASSET REFINANCING IS THE PROCESS OF IT’S A SIMPLE IDEA — IF YOU CAN’T KEEP UP
SECURING A LOAN AGAINST VALUABLE ITEMS PAYMENTS ON THE LOAN, THE LENDER TAKES THE
THAT YOUR BUSINESS OWNS, LIKE BUILDINGS, ASSET TO RECOUP WHAT’S OWED.
VEHICLES OR EQUIPMENT.

ASSET REFINANCE
 BOND YIELD
BOND YIELD REFERS TO THE RETURN AN
INVESTOR RECEIVES ON A BOND. SINCE BOND
YIELD CAN BE CALCULATED IN DIFFERENT
WAYS, LET’S CONSIDER

• CURRENT YIELD
• YIELD TO MATURITY (YTM)
 CURRENT YIELD

THIS MEASURE EXAMINES THE CURRENT

PRICE OF A BOND, RATHER THAN LOOKING
AT ITS FACE VALUE. CURRENT YIELD
REPRESENTS THE RETURN AN INVESTOR
WOULD EXPECT TO EARN, IF THE OWNER
PURCHASED THE BOND AND HELD IT FOR
A YEAR.
 YIELD TO MATURITY
YIELD TO MATURITY (YTM) IS THE TOTAL RETURN
ANTICIPATED ON A BOND IF THE BOND IS HELD UNTIL
IT MATURES. YIELD TO MATURITY IS CONSIDERED A
LONG-TERM BOND YIELD BUT IS EXPRESSED AS AN
ANNUAL RATE.
 Duration measures a
bond's or fixed
income portfolio's
price sensitivity to
interest rate changes

DURATION
Different from time
to maturity although
they are both
measured in years
 MODIFIED
DURATION
• Modified duration
measures the price
change in a bond
given a 1% change in
interest rates

• If volatility is 3.6, it
means that 1% change
in YTM results in 3.6%
change in market
value of bond
 CONVEXITY

• Convexity is a measure of the curvature of the changes in the price of a

bond in relation to changes in interest rates, addresses this error, by
measuring the change in duration, as interest rates fluctuate.
Thank you