important things Flashcards
1
Q
how can a business strengthen its balance sheet?
A
- spin off non essential assets
- fortify a strong capital base
- manage accounts receivable/collect overdue bills
- ensure sufficient liquidity to cover all current events
- reinvest profits
- renegotiate terms of your debt to obtain better interest rates
2
Q
why is a company doing stock buybacks?
How can a company in general use extra cash?
A
- increase dividends payed to shareholders
- increase capital expenditures to invest back in the company
- repurchase stock, returns capital to shareholders, tells investors how companies feel about the macro environment
3
Q
what can a company do in case of a cash crunch?
A
- disposing its assets
- sell receivables
4
Q
what are benefits of Chapter 11 bankruptcy filing?
A
- Interest and principal payments can be delayed without penalty
- managers are given the exclusive right for 120 days after the bankruptcy filing to submit a reorganization plan
5
Q
what are formal bankruptcies proceedings designed for?
A
protect firm and its creditors: firm can solve cash flow problems
creditors want to ensure the firm´s owners do not siphon off assets.
