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FIN419 Scott Equipment Organization

FIN419 Scott Equipment Organization - SCOTT EQUIPMENT 1...

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SCOTT EQUIPMENT 1 Scott Equipment Organization FIN/419 Scott Equipment Organization Generally the focus of corporate financing is based on long-term financial decisions, in particular capital structure, dividends, or investments. While analyzing long-term financials is common, short-term assets and liabilities are equally important components of total assets and need careful analyzing as well. Working capital management plays an important role in the
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SCOTT EQUIPMENT 2 profitability, risk, and value of a company therefore management of short-term assets and liabilities sanctions careful investigation. Efficient management of working capital has become an important factor in the success of an organization. A company can minimize risk and improve its overall performance by understanding working capital drivers. Scott Equipment Organization is considering a combination of various short- and long- term debt policies in financing of assets. The policies include aggressive, moderate, and conservative strategies. The company can adopt an aggressive financial policy that is associated with higher return and higher risk, a moderate policy with moderate return and moderate risk, or a conservative policy with lower risk and lower return. To determine which policy is best for the company the policies will be compared based on profitability and risk. Amount of Short-term Debt Financial Policy $ Mil. LTD STD Aggressive (large amount of short-term debt) $24 8.5% 5.5% Moderate (moderate amount of short-term debt) $18 8.0% 5.0%
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