Sample Term Paper

The majority portion of the debt is short term which is accessed through a variety of channels. Centrica chooses to purchase a great deal of its commodities as well as some of the services on credit which allows payments to be delayed. Furthermore, the company engages heavily in derivatives such as forward contracts and option not only for hedging purposes but also for treasury management and this appears substantially among the short term liabilities of the company. Bank overdrafts and other short term sources of cash are also employed for short term management.

            Major portion of the long run sources of finance are made up of bank loans and long term lending contracts. This includes raising ₤750 million through the bond market in 2008 as well as a similar amount in the Euro market. Apart from debt financing, Centrica also engages in equity financing, choosing to make rights issues mostly so as to be able to access capital without diluting the ownership to a great extent so that a significant shift in the management and strategy of the company does not come about.

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