Question
Hey i want solution as soon as possible thanks You are sitting in a coffeeshop and you overhear a conversation between what appears to be
Hey i want solution as soon as possible thanks
You are sitting in a coffeeshop and you overhear a conversation between what appears to be a concerned Chief Executive Officer (CEO), Larry, and his Chief Financial Officer (CFO), Phillip. Larry became concerned after Phillip made the following comment...
'When you look at this project, relative to our competitors, we are heavily invested - this project will make or break us. Luckily, we have sunk some equity in it now, but really the mix just matches the levels of what you would expect in this market. But I am a bit concerned going forward.
Last year's net income was a bit off, and it's becoming apparent that we may not even meet the revised expectations... so we are a bit tight on cash. Unfortunately, I think we must push dividends out two more periods until this project starts generating some income. I was hoping that we could have delivered dividends in this next period, but this is not looking possible anymore. I have no doubt I need to go see Bob from the bank (NAB) to tie us over until we can get some income in from this investment - we basically need a loan to keep this project going because our other two products are losing market share and will likely shrink further over the next two periods.'
- Based on the evidence in Phillips comments, explain the reasons why the CEO (Larry) would be concerned for stakeholder welfare
- Discuss any two, of the three key decisions a Financial Manager would need to optimise if she were to successfully maximise shareholder value.
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