Is it possible for a firm to have too much cash?
Why would shareholders care if a firm accumulates large amounts
of cash?
What options are available to a firm if it believes it has too
much cash?
How about too little?
Provide real world examples
Is it possible for a firm to have too much cash?
Why would shareholders care if a firm accumulates large amounts
of cash?
What options are available to a firm if it believes it has too
much cash?
How about too little?
Distributions to Shareholders: Residual Dividend
Model
When a firm is deciding how much cash to distribute to
stockholders, it should consider two things: (1) The overriding
objective is to maximize shareholder value and (2) the firm's cash
flows belong to shareholders, so income shouldn't be retained
unless management can reinvest those earnings at higher rates of
return than shareholders can earn themselves. The -Select-capital
budgetingcapital structureresidual dividendItem 1 model sets the
dividend paid equal to net income minus the amount...
Examine the key reasons why a business may not want to hold too
much or too little working capital. Provide two (2) examples that
illustrate the consequences of either situation.
More “money” is not always better. Explain to someone why they
may have too much “money”, and if they are in such a position
(having too much “money”) what they should do about it. Note: A
definition of “money” will probably help in your explanation.
Q1. Should a firm have as much as possible
OCL(operating current liabilities) and as little as possible
OCA(operating current assets)? Briefly explain.
Every firm faces challenges related to growth- either too much
or too little. Managers need to understand the impact of growth on
the firm and recognize that "growth at all costs" should not be the
main objective of a firm. In this week's module, discuss the
balance between growing too quickly and growing too slowly as a
firm and what decisions a manager can make to help impact this
balance.