Short-Term Investments
Whenever a company has surplus funds, i.e., funds that are not needed to complete daily transactions, it may choose to invest these funds on a short-term basis to generate extra funds. These short-term investments usually consist of investments in securities…
Accounts Receivable, Payable and Inventory
It is crucial that a company effectively manages its accounts receivables, inventory positions, and accounts payables. If not, the company could find itself in a consistent loss-making position, which will place doubts on its ability to continue in business as…
Short-term Funding Choices
Regular assessment of short-term funding aims to ensure that a company has the ability to handle peak cash needs and maintain sufficient sources of credit to fund ongoing cash needs. Short-term Funding The short-term funding alternatives that are available to…
Describe Corporate Governance
Corporate governance may be defined as the system of internal controls, processes, and procedures by which a company is managed, directed, or controlled. Weak corporate governance practices have resulted in the failures of many companies. The corporate governance practices tend…
A Company’s Stakeholder Groups
Corporate governance systems can be influenced by several stakeholder groups which may or may not have conflicting interests. A company’s primary stakeholder groups include its shareholders, creditors, managers, other employees, customers, suppliers, governments or regulators, and its board of directors….
Relationships in Corporate Governance
The term ‘Principal-agent relationship’ or just simply, ‘Agency relationship’ is used to describe an arrangement where one entity, the principal, legally appoints another entity, the agent, to act on its behalf by providing a service or performing a particular task….
Factors in Investment Analysis
Environmental, social and governance factors are collectively referred to by the acronym “ESG.” ESG integration is the practice of considering environmental, social, and governance factors in the investment process. Ideally, ESG integration should be implemented across all asset classes, including…
Beta and Cost of Capital of a Project
When estimating the cost of equity using the Capital Asset Pricing Model (CAPM), a reliable estimate of beta must be used. The beta for a company that is not publicly traded may be estimated using the pure-play method. In the…
Marginal Cost of Capital Schedule
The cost of the different sources of capital tends to change as a company raises additional capital, thereby resulting in a change in its weighted average cost of capital (WACC). The marginal cost of capital (MCC) schedule depicts this relationship…
