Corporate Financing Report Essay Example | Topics and Well Written Essays - 750 words

Corporate Financing trace - Essay ExampleThe companys chief likewise stated that this is done to increase the value of business for sh areholders and to utilise the cash which is finesse idle. The article is about financial management, because according to the fundamental principle, any cash lying idle is lessen its future value. Therefore, all cash must be earning some returns too concur 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 time out hits all the business and they may not be able to cover the losses. Similarly, firm ordain also gift to make deep analysis about the future value of their investment. They cannot just invest in anything that they should make sure that they investing at the right place where the firm is not use future value of their cash, in other words, returns on this investment or profits s hould be great than pretentiousness rate in the country. Only this way future value of their money will roost stable and writer should have discussed this point in his article.If you have been able to crack a keep trend in the market about inflation rate and interest rate, you should adjust your dandy outgo on the basis of these. You should always go for those assets which are going to give you more return than inflation rate. ... you 12% returns whereas inflation rate in your country is 13%, then you should not buy this assets because you will be 1% worse off or your money value will be decreasing over time. Similarly, you should go for those assets which are giving you returns of more than the inflation rate and in this way buy power of money will not be deteriorating. Similarly, you should borrow money to invest in capital expenditure, only if it is deemed that youll get more returns than the interest rate. If you buy an asset giving you 5% return whereas you have borrowe d money at the rate of 8% then you will not be benefiting from that purchase but instead you will be losing money.So, identifying the market trend, it is imperative that all capital spending should be joined with inflation and interest rate. Such expenditures should only take play if the returns of this spending are greater than the forecasted inflation and interest rate.ReferencesJames Pethokoukis, Reuters, Written on 10 June