Final Project - Research Paper Example

Investment that was made in Brazil could have been overinvestment that made the business spend much on fixed assets. The production capacity that is not used in this situation does not generate any cash hence becomes a waste of cash. Negative flow of cash in Brazil could also be caused by too much stock in the country. The stock will tie up cash and through this; there is increase in risk that the stock become obsolete. Allowing too much credit during sales is a factor that is able to lead to negative cash flows (Chorafas, 98).

Credit to customers is a way to build revenues but late payments are a problem that always arises but a strain on cash flows. Overtrading is a factor that could make Brazil has negative cash flows. Overtrading occurs when the business expands quickly putting on pressure on short-term finance. Seasonal demand in the products also is a factor that has led to negative cash flows in the country as the goods are mainly demanded during war times (Chorafas, 209). There are feelings by investors that the statement of cash flow is the most transparent and this makes it difficult to fudge.

This makes it to be the most reliant in the business to discern the true performance of a business. The division of cash flow statements is divided into three major areas making to be the most effective for use in the business (Dominguez and Tesar, 204). The division includes operating activities that constitutes the revenue generating activities to the business. Investing activities are also a composition of a cash flow statement that constitute payments that are made to acquire long term assets as well as cash that are received from sales.

Financial activities constitute activities that will change equity or borrowings of a business. Currencies that are to be hedged by Raptor International are those that are on sales and investments. The currencies when hedged will enable holding onto foreign currencies as an investment such that a