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+--- Thread: fixed and floating charge (/showthread.php?tid=5666)
fixed and floating charge - rabia-k - 04-05-2009
Can anyone please explain the following.
1. what is a charge?
2. what is a fixed and floating charge?
3. how can one idetify charges as fixed or floating?
4. what is crystallisation of floating charge?
thanks
- sumairalam - 04-05-2009
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by rabia-k</i>
<br />
Can anyone please explain the following.
1. what is a charge?
<font color="red">Charge is form of security usually taken by a lendor on an company to secure interest or payments</font id="red">
2. what is a fixed and floating charge?
<font color="red">
Fixed charge is over the non-trading assets of the company like machinery , building , debts etc.
Floating charge is over the cash and stock-in- trade</font id="red">
3. how can one idetify charges as fixed or floating?
<font color="red">In fixed charge company is prohibit to enter into any sales transaction for the assets under charge. For example company can not sell the machine or equipment without taking prior approval from lendor.
In floating charge, company is allowed to carry sale/purchase transaction ( trading) without any restriction.</font id="red">
4. what is crystallisation of floating charge?
<font color="red">If there is any default of payment the charge is said to be crystalize. means fixed charge all over the assets . prohibits any trading.
</font id="red">
thanks
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Answer to these type of questions are very well defined at http//www.invested.com.au or www.investopedia.com/
- rabia-k - 04-05-2009
thanks