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Long term finance strategies

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What are some long term finance strategies? Give a brief example of how one might be used in practice.

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There are numerous long term finance decisions that a company must make such as:
? How much debt and equity should the company carry?
? What is the right mix?
? What cash handling strategy should be used?
? How aggressive should they be in investing cash vs. investing back into the company?
? Will company value be maximized by going public or staying private?
? How should the company grow - organically (internal) or by acquisition?
? How should the firm treat its risk exposures to avoid a large financial loss?
? Should the company expand internationally?
? What risks are involved?

How a company will finance itself or its capital structure, is arguably the most critical decision it can make. To make this decision, the firm must know where it stands against its industry peers by comparing their financial ratios, where it stands with working capital, how its stocks and bonds rate in the marketplace, what its cost of capital is and have a thorough assessment of its cash flow. After analyzing all of these critical finance components, ...

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7 Paragraph discussion of long-term finance strategies.

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1. Two companies, A and B, have the following balance sheet accounts:

BELOW ARE TWO PROBLEMS THAT I NEED SOLVED. I HAVE ALSO ATTACHED A WORD DOCUMENT WITH THE PROBLEMS IN FORMAT THAT IS EASIER TO UNDERSTAND. THEY ARE ALSO LOCATED IN PDF FORMAT ON PAGE 170 THANKS.

1. Two companies, A and B, have the following balance sheet accounts:
A B
Current assets $ 150 $ 800
Fixed assets 300 2200
Current liabilities 75 600
Long-term debt 75 1000
Equity 300 1400
a. Compute values for all of the ratios that measure working capital for firms A
and B.
b. Compare Firm A to B with regards to its need for working capital and how it
finances its working capital (short-term vs. long-term financing).

2. The Latigo Company has the following financial information:
Sales $ 200
Cost of goods sold 100
Administrative expense 44
Depreciation 40
Interest expense 2
Tax 7
Net profit $ 7
Cash $ 5
Accounts receivable 20
Inventory 25
Fixed assets 50
Accounts payable 5
Note payable 15
Long-term debt 20
Equity 70
a. The current assets to sales ratio for the industry is 0.20. State whether Latigo
make more or less use of working capital than the industry.
b. Compute the working capital turnover for Latigo and for the industry.
c. Compute the operating cycle and the cash conversion cycle for Latigo.
d. The industry average cash conversion cycle is 112 days. Compare the industry
to Latigo and identify any inferences that you can make.

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