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Complete 3 pages APA formatted article: Corporate Financing Report. The company's chief also stated that this is done to increase the value of business for shareholders and to utilize the cash which i
Complete 3 pages APA formatted article: Corporate Financing Report. The company's chief also stated that this is done to increase the value of business for shareholders and to utilize the cash which is lying idle. The article is about financial management, because according to the fundamental principle, any cash lying idle is decreasing its future value. Therefore, all cash must be earning some returns too keep up with the future value.
On the other hand if you look at the article critically, there are some weak arguments in it. When the firm says that it want to diversify to spread the risk, it should be aware that recession hits all the business and they may not be able to cover the losses. Similarly, firm will also have to make deep analysis about the future value of their investment. They cannot just invest in anything but they should make sure that they investing at the right place where the firm is not using future value of their cash, in other words, returns on this investment or profits should be greater than inflation rate in the country. Only this way future value of their money will remain stable and writer should have discussed this point in his article.
If you have been able to crack a continued trend in the market about inflation rate and interest rate, you should adjust your capital spending on the basis of these. You should always go for those assets which are going to give you more return than inflation rate.