University of Arizona Long-Term Financial Decisions Discussion

Prior to beginning work on this discussion forum, read Chapters 16, 17, and 18 in the Foundations of Financial Management textbook.

Initial Response:

Assume you are the CFO of a medium-sized company and you are advising the CEO on some upcoming strategic initiatives that will have long-term implications. In other words, these are important decisions.

For your initial discussion forum post, address the following questions posed by the CEO:

• It appears we may need to raise more capital. Is expanding debt a good idea? Why or why not and should our given assets impact this decision?
• In our economic environment, should we issue bonds, common stock, or preferred stock? What would be some pros and cons?
• Or should we forego this immediate opportunity and buy back some of our outstanding common stock? What market conditions would make this a good move; what might be some pros and cons?
• Should we issue a dividend, or should we retain cash in the company for future opportunities? How might this impact future growth? Are we obligated to pay our shareholders a dividend?
• References
• Block, S. B., Hirt, G. A., & Danielsen, B. R. (2019). Foundations of financial management (17th ed.). McGraw-Hill Higher Education.
• Bary, A. (2018, October). Opportunities abound in preferred stock (Links to an external site.). Barron’s, 98(43), 19.
• Benz, C., Siracusano, L., & Freeman, M. (2015, July). The right way to invest for growth (P. J. Lim, Moderator) (Links to an external site.). Money, 44(6), 62–67.
• Erbschloe, M. (2019). Dividend policy (Links to an external site.). Salem Press. https://www.salempress.com/
• Newton, H. (2019). Long-term debt (Links to an external site.). In Salem Press encyclopedia. Salem Press.
• Rockwell, S. (2018, March). When to beware of debt financing: This source of capital has become a more common way to fund growth, but it has its downsides (Links to an external site.). Nation’s Restaurant News, 52(4).