Need a masters level 200 word response to the following post. The response must include 2 scholarly references and Bible references. References utilized by the original poster is below.
Every business needs a steady cash flow to keep the company operational and the “doors open”. Without cash, the business will not be able to pay its employees, vendors, expenses, or make a profit. Cash and cash flow are the life blood of any business. Without either, the business will die.
The company has a minimum cash flow. However, it is not enough to keep the company in business. Cash is needed now. To raise the cash needed, the company has some of the following options that they would need to initiate in order to obtain cash needed to keep the business from bankruptcy.
The company can obtain cash from the operations. The employees and management can take a reduction in pay for a short time with a promise to reimburse lost pay, plus bonuses, when new revolutionary product is released. The company would also stop any dividend payments to shareholders with promises to pay later. Plus, inventories would be reduced and purchases held to minimum.
Cash from the assets would be another way of increasing cash flow. Property, plant equipment, and other assets could be sold. Since the new product that is being manufactured is revolutionary, some of the production equipment may be obsolete and can be sold. Some of the ideas or concepts for the new product could be sold, if needed.
Since high expectations exist for the new product line, money could be borrowed at lower interest rates from financial institutions. Receiving cash from debt is a quick way of adding funds to the company. Borrowing money allows the company to spend the funds on what is need to keep the business operational.
Issuing stocks and bonds can also generate cash. Cash from equity financing is not as risky as borrowing money, but existing shareholders are not excited about reducing their profits and controls (Garcia, 2018).
Since the CFO and management has to keep the shareholders happy with future of the company, the management team would need to address the following areas with the shareholders:
Garcia, M. (2016, October 26). Major Sources of Cash in Corporate Finance. Retrieved from https://smallbusiness.chron.com/major-sources-cash-corporate-finance-74789.html
Vasconcelos, G. D. (2018, January 11). 3 Easy Steps To Keep Your Investors Happy. Retrieve from https://www.forbes.com/sites/goncalodevasconcelos/2018/01/11/3-easy-steps-to-keep your-investors-happy/?sh=5ef96f6c68a9