Nobody downloaded yet

Corporate Financial Strategy - Essay Example

Comments (0) Cite this document
While making investments it is reviewed if sufficient amount of revenues can be generated so as to satisfy the requirements of the stakeholders. It is important that the…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER96.8% of users find it useful
Corporate Financial Strategy
Read TextPreview

Extract of sample "Corporate Financial Strategy"

Download file to see previous pages The decision to make an investment is based on this benchmark. Mostly the companies employ various sources of finance such as equity, preference, debentures, term loans etc. The calculation of WACC is done using the weights of the different components of capital base.
There are varying returns for all the sources. As the equity holders bear the maximum risk, the returns required by them is higher than the other investors. This is mainly because in case of extreme situation like insolvency, the equity shareholders have the last claim on the assets of the company. In such situations preference is given to the lenders of the company. Moreover, the declaration of dividends is not mandatory for the companies. A dividend is declared only if the company has surplus earnings whereas the payment of interest cost is mandatory. The company has to honour its debts irrespective of its profitability. This is the reason that the lenders get a lower return as compared to equity holders. But, if the company is highly leveraged, even the lenders become cautious and demand for higher returns. This is the reason that all the companies try to optimize their capital base for minimizing the cost of capital.
The cost of capital is the minimum return that a company must earn from the business activities to payoff its investors who provide the necessary capital in the form of shares, debentures and loans. Two sets of information are needed for calculating the cost of capital- weights of the various sources of finance and their respective costs.
Many studies have been conducted on the cost of capital which is dependent on the composition of the capital base of the company. The capital structure of a business measures the ability of a company towards meeting the needs of its stakeholders. Modigliani and Miller (1994) highlighted how the value of the firm is not affected by its capital structure as the tax advantage of debt ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“Corporate Financial Strategy Essay Example | Topics and Well Written Essays - 5500 words”, n.d.)
Corporate Financial Strategy Essay Example | Topics and Well Written Essays - 5500 words. Retrieved from
(Corporate Financial Strategy Essay Example | Topics and Well Written Essays - 5500 Words)
Corporate Financial Strategy Essay Example | Topics and Well Written Essays - 5500 Words.
“Corporate Financial Strategy Essay Example | Topics and Well Written Essays - 5500 Words”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Corporate Financial Strategy

Corporate Strategy

...Analysis of and Evaluation of Business strategies (the Toyota industry) Introduction Development of a propermarketing strategy for a company is a crucial step to an organization. Any market should adopt the changing market strategy based on its financial capability and adaptability. It helps the company to reach new customers, new market potentials, and new market orders too. A company may use a current product to penetrate in the market, improve an existing product, or make it meet current demands. The most recommended strategies and that have been adopted by the top achieving companies are; intensive, integration, and diversification...
12 Pages(3000 words)Essay

Corporate Strategy

...?Running Head: Analysis of Corporate Strategy of Bank of America on Merger with Merrill Lynch Are Bank of America and Merrill Lynch Good for Each Other? [Name of the Writer] [Name of the Institution] [Name of the Professor] [Course]                    Are Bank of America and Merrill Lynch Good for Each Other?       In the year 2008, it was seen that Bank of America which was valued at $50 billion planned to acquire Merrill Lynch. The acquisition would possibly mark the end of one of the biggest names of finance in the American world. On the other hand, it would be the creation of the biggest bank of the nation. The announcement of the merger led to a fall in the stock price of Bank of America, while an increase in the stock price... would...
1 Pages(250 words)Essay

Role of Phytooestrogen in the Prevention of Breast Cancer

23 Pages(5750 words)Coursework

Corporate Strategy

... 13-11-2006 Corporate Strategy The last five years in general and the period since 2002 in particular have been tumultuous for corporations all over the world. Greatly admired companies bit the dust while those were closely written off, staged a splendid recovery. Clearly what works and what does not in business remains an unpredictable as ever. Understanding the process by which existing business/companies become obsolete and new business/companies evolve is what we are likely to discuss so that we can decide in which direction companies may change strategically to grow and perform. Strategy is the direction and scope of an organization over the long term, which achieves advantage for the organization through its configuration... of...
11 Pages(2750 words)Essay

Corporate Financial Strategy

...Corporate Financial Strategy Prepared by Submitted by Word count Question 1. Introduction The company considered is Bilacom Cereal (BC) Plc introducing a new cereal product. The purpose of this paper is to analyse the cash flow and the investment decisions in the coming five years after the introduction of the product. This includes the financial viability of the project under the estimations of the costs for launch and the revenue that can be incurred in the coming five years. The effect of the sales of the new product on the sales of the previous products of the company also needs to be considered when the financial and cash flow analysis will be done on the product. The money spent by the company and the level of the cash flow... rather...
16 Pages(4000 words)Essay

Corporate Strategy operating distribution facilities at locations across the U.S. (PVH Annual Reports, 2008). In regards to the sourcing operations of the firm, according to the Corporate Social Responsibility report, PVH has implemented a ‘Global Human Rights and Social Responsibility Program’ which indicates that the standards for price, quality and logistics are kept on par with the human rights consideration (PVH CSR, 2008). What this means is that the firm self-identifies a global operator and all stakeholders are equally responsible to the firm’s code of conduct. Why PVH is a global firm is important because of the implications is has for the firms strategy. According to the 2008 financial...
1 Pages(250 words)Essay

Corporate strategy

...Corporate Strategy Table of Contents Introduction 3 Product and Services of Cookson 4 Geographic Scope 7 Critical External Analysis of Cookson Group with Appropriate Models 8 PESTLE Analysis 10 Porter’s Five Forces Analysis 12 Critical Internal Analysis of Cookson Group with Appropriate Models 13 SWOT Analysis 13 Stakeholder Analysis 14 Conclusion 15 References 16 Bibliography 18 Introduction Corporate Strategy is described as a direction by which an organization obtains its predetermined objectives in order to attain business success in the long-run. The creation of corporate strategies comprises the development of scope as well as...
10 Pages(2500 words)Essay

How risk affect corporate financial strategy

...How risk affect corporate financial strategy Risk is the probability of loss to occur. Corporate financial strategy is affected by various types of risks. This includes political risk. Conflicts and civil wars leads to massive loss of assets by companies. When there is conflict in a country, companies’ property are looted and others destroyed. Companies located in these countries suffer huge losses since it become hard to protect their investments. Nationalization of industries also poses political risk since companies’ lose their licenses; hence, they cannot continue to operate in these countries. Governments may also increases taxes...
1 Pages(250 words)Research Paper

Corporate Strategy

...of Dyson Private Ltd. are taken at the top management level. In order to evaluate the strategic options available for the business, the following are the findings based on the P.E.S.T analysis (Political, Economical, Social and technological) (Pamela, 2004). Political: To begin with the political strategies and conditions impacting the long term corporate strategic vision of Dyson Limited Company, either getting a loan for business expansion such as opening a new factory or raising fund has been made difficult for Dyson Co. This is due to the sanctions on large companies to pay progressive interest on loan this sanction has made loan less reliable and hence forced Dyson Co to alter its strategic...
10 Pages(2500 words)Essay

Corporate Financial Strategy

...CORPORATE FINANCIAL STRATEGY Introduction Two cases on corporate financial strategy were assigned to be analyzed based on the principles of corporate finance. The first case was on making choices as to where to invest given several options of mutually exclusive events. The second case was on analyzing dividend policy as practiced by the company and how well this policy contributed to the overall wealth of the stockholders. Two sets of questions were answered after analyzing each case, applying whatever principles were learned during the course. 2. The case of Chesterfield Wanderers The company was considering investing...
13 Pages(3250 words)Case Study
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Corporate Financial Strategy for FREE!

Contact Us