Business Discussion 2 topics

Topic 1: 1 paragraph and 1 cited source
Apply capital budgeting methods and processes to make a decisions in personal life and professional duties? Please elaborate on your answer with example.

Topic 2: 1 paragraph and 1 cited source
Using the article “”CFOs in 2021 Will Keep an Eye on These 10 Things”. if you were the CFO of a global business, how would you prioritize the 10 things referenced in the article? Which of the 10 things referenced in the article are related to capital management? What bearing does the transition away from Libor have on a companies’ borrowing arrangements? Why do you think ESG disclosures fall under the purview of the CFO?

ANSWER

Capital budgeting methods and processes are aimed at providing an analysis about a project in terms of its inflow and outflow with the objective to determine whether the project reaches an expected benchmark or not (). For example, in a basic activity such as redesigning a kitchen in a personal life, the analysis would involve comparing the amount of cash required to achieve it, the necessity of the project in comparison to other projects that demand the same cash inflow, all to be compared with the outflow, the expected gains resulting from accomplishing the project. In a professional setting the same idea maintains. For a business to decide to upgrade or completely overhaul their information systems, management has to consider the capital budgeting methods to make organisational decisions.

Chief Financial Officers (CFOs) have to consider economic recovery, corporate tax, regulation, trade, cash and capital expenditures, mergers and acquisitions, remote work, dividends and share buybacks, ESG disclosure and Libor transition everyday (WSJ.com). As a CFO, depending on the size of the company, I would stay ahead of these issues by creating sub-departments with personnel to handle each goal in the company. Issues related to capital management from the list include cash and capital expenditures, economic recovery and corporate tax. Transitioning away from Libor has a serious challenge on coming up with a replacement system with most of them being impractical, volatile and lacking in structure which all make borrowing arrangements that were already complicated to be more vulnerable. Lastly, ESG disclosures fall under the purview of the CFO because they comprise the impact of an investment in a company which is well within the scope of finance.

References

Levy, J. (2017). Capital as Process and the History of Capitalism. Business History Review, 91(3), 483-510.

WSJ.com. CFOs in 2021 Will Keep an Eye on These 10 Things. Retrieved on 9^th April 2021 from https://www.wsj.com/articles/cfos-in-2021-will-keep-an-eye-on-these-10