StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Operating, Investing and Financing of a Firm Abroad - Essay Example

Cite this document
Summary
Taylor Wimpey Plc is a leading real estate development firms in United Kingdom and also operates into US and other markets. Since financial crisis, the firm has not been able to perform well due to slump in the housing market in US, US and other developed markets…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER91.5% of users find it useful
Operating, Investing and Financing of a Firm Abroad
Read Text Preview

Extract of sample "Operating, Investing and Financing of a Firm Abroad"

Taylor Wimpey Plc is a leading real e development firms in United Kingdom and also operates into US and other markets. Since financial crisis, the firm has not been able to perform well due to slump in the housing market in US, US and other developed markets. (Financial Times). This change in the overall business and economic conditions therefore have also reflected into the overall operating, investing as well as financing activities of the firm also. Details of firm’s operating, investing and financing activities are given below: Operating Activities Firm has been able to generate profit from its continuing business and has shown that its operating activities have been affected by reversal of its provisions.

1 Decreases in provisions may indicate that the firm is expecting a favorable future scenario wherein its bad debts may reduce and hence it has reversed its provisions. This may also suggest that the firm has put in place a better and improved account receivables policy along with improved recovery strategy. Despite this, firm seems to tying in more of its capital in receivables and inventory however, considering the nature of business i.e. construction, it may seem that the receivables is a natural part of the business.

Since construction projects take time to complete. During such phase, receivables may naturally occur as construction activity takes place. There has been pension contribution too in the operating activities wherein payments have been made in excess of the charge. Firm has also paid the interest on its loans suggesting that higher levels of debt may also increase the interest expenses for the firm and resultantly interest payments forming one of the larger part of operating activities. Investing Activities A closer look at the investing activities of the firm, as reflected in its cash flow statement, indicates that much of the cash in this category has been generated by the sale of subsidiaries.

This suggests that the firm has been actively involved in the disposal of those subsidiaries which may not be proving profitable. Considering the current scenario, this may seem a relatively straight forward and correct strategy to divest those assets which are not profitable and may divert the attention and energy of the firms. Most profitable firms tend to focus more on their core competencies and engage into such activities which can help maintain the competitive advantage. Other sources of investing activities are cash generated from joint ventures and it is also the second most important investing activity of the firm.

In order to expand further into international markets, firm has been making joint ventures with foreign firms. Entering into new markets may also seem a plausible strategy as growth options in already developed markets may be low due to adverse economic situation. This therefore may indicate a relatively good and valid strategy for the firm to adapt. Financing Activities Major financing activity has been observed in the repayment of loans wherein firm has been able to pay off its loan to reduce its debt.

This seems to be a relatively good strategy to reduce the debt and consequently reduce the overall risk of the business. Higher levels of debts actually reduce the firm’s ability to divert its cash flow to the constructive business activities besides increasing its risks. It is also critical to note that higher levels of debt push firms to become more vulnerable especially during the worse economic times such as current one. The wiser strategy in this regard therefore can be the reduction of debt in order to free up firm’s resources and further discipline the balance sheet of the firm.

Firm is therefore cleverly following the strategy of repaying its debentures as well as loans in order to allow it to actually reduce the risk and improve its financial position. Financing activities also indicates that the firm has been actively pursuing the repurchase of its own shares. This may also seem a good strategy especially during the times when markets are not performing well. Low performance of stock markets automatically reduces the value of most of the shares therefore firms find it feasible to actually repurchase its shares at lower prices and re-issue them at a later date against higher prices.

Repurchase of shares also seem to strengthen the balance sheet of the firm and reduce the volatility of the value of the shares in the market. Low volatility of prices therefore may create a relatively favorable image of the firm for the investors. Resultantly firm can resell its shares at higher prices in future and further strengthened its balance sheet. Works Cited Financial Times. Taylor Wimpey PLC. 28 June 2012. 28 June 2012 .

Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Operating, Investing and Financing of a Firm Abroad Essay”, n.d.)
Operating, Investing and Financing of a Firm Abroad Essay. Retrieved from https://studentshare.org/finance-accounting/1453720-operating-investing-and-financing-of-a-firm-abroad
(Operating, Investing and Financing of a Firm Abroad Essay)
Operating, Investing and Financing of a Firm Abroad Essay. https://studentshare.org/finance-accounting/1453720-operating-investing-and-financing-of-a-firm-abroad.
“Operating, Investing and Financing of a Firm Abroad Essay”, n.d. https://studentshare.org/finance-accounting/1453720-operating-investing-and-financing-of-a-firm-abroad.
  • Cited: 0 times

CHECK THESE SAMPLES OF Operating, Investing and Financing of a Firm Abroad

Personal Finance

Stocks Stocks are certificates representing partial ownership of a firm.... The first offering of a firm's stock to the public is referred to as an ‘initial public offering' (IPO).... Thus, even if a firm is not issuing new shares of stock, investors can easily obtain shares of that firm's stock by purchasing them in the secondary market.... Stock investors become shareholders of the firm.... Some firms distribute quarterly income to their shareholders in the form of dividends rather than reinvest the earnings in the firm'...
7 Pages (1750 words) Term Paper

Analyzing the Reasons for Investing Abroad

The author of this paper critically analyzes and discusses the reasons why a firm chooses to invest abroad.... Every company that thinks of investing abroad should thoroughly conduct a cost-benefit analysis.... Firms decide to invest abroad for various reasons.... hellip; There are a number of factors to take into account at first with regard to the reasons companies must invest abroad, and several broad aspects can be associated with the general degree of risk a specific host country has for a multinational company (MNC) planning to or attempting to invest abroad....
8 Pages (2000 words) Coursework

Strategic Asset Seeking. Chinese Business Groups and their Differences in Oversees Expansions

The current trend of countries' economic performances and investors' decisions are both influenced and have an impact on foreign direct investment (FDI).... Companies are taking risks in foreign countries by transferring some of their assets to form new enterprises.... hellip; What is Strategic Asset Seeking?...
11 Pages (2750 words) Essay

Capital and Liquididty Ratio Analysis

cash from operating activities, investing activities and financing activities. An analysis of Zytronic cash flow In the year, 2011 the company net cash flows from operating activities was £3658000 compared in to £3147000 in 2010.... The second component of the cash flow statement is the cash flows from the investing activities.... investing activities are those activities that a company puts its resources in order to earn profits, increase its capital assets in...
9 Pages (2250 words) Essay

Autozone Industry Analysis

Selling auto parts is a profitable business that has a great demand in the United States and abroad.... The firm began to sell its stocks in the open market in 1991.... The fact that AutoZone is a publicly traded company gives this firm an advantage in this industry due to the fact that the company always has the option of releasing a secondary stock offering to raise capital....
5 Pages (1250 words) Essay

Managing Dollar Exchange Rate

Foreign currency exchange risk facing a firm is the exposure to probable financial losses because of foreign currency devaluation against the domestic currency… Thus, a firm involved in international transactions should adopt exchange rate measures to mitigate the financial losses that are likely to arise if the foreign exchange rates between the cross-border country currency and home currency fluctuates.... Managing the exchange risk facing a firm engaged in cross-border trade requires the management to determine the exposure risks been faced, hedging strategies capable of mitigating the risk and the existing instruments that can be used to cushion the exchange risks....
7 Pages (1750 words) Assignment

Introduction to Financial Management of A Company

An author of this paper suggests that the company should adopt a careful approach in financing its acquisitions.... The paper "Introduction to Financial Management of A Company" outlines the general concept of financial management and describes the best practices aimed at maintaining cash-flow....
13 Pages (3250 words) Research Paper

The Importance of the Financial Evaluation of Projects

he dissertation undertook a comprehensive financial analysis of each of the firms involved, to determine the status of the acquiring firm and the potential of the target firm to add value to the acquirer.... The writer of this dissertation "The Importance of the Financial Evaluation of Projects" undertakes to determine how financial evaluation of consumer retail businesses may be applied in order to gauge the risk of investment and prediction of financial failure....
62 Pages (15500 words) Dissertation
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.
Contact Us