Working capital is money to be used for daily operations and any debt that a company may have. Who should be making decisions about how it is to be allocated? Why? Some say mis-management of working capital a contributed to the 2008 recession? How? Should the government be in charge of managing company’s working capital? Why or why not?
Some people say electric companies should not be allowed to pay cash dividends because such a prohibition would (a) reduce their need to raise external capital, thus (b) reducing their transaction costs, so that (c) they would have a lower cost of capital, and consequently (d) lower utility rates, and (e) make customers better off. Utility stockholders would receive capital gains instead of dividends, which (because of lower tax rates or tax deferral) would lower their taxes. Do you think a legal restriction preventing utilities from ever paying a cash dividend would result in this chain of events? If not, where does the logic break down?
Describe the difference between secured and unsecured debt. What is the advantage / disadvantage of each? Do not cut and paste a definition or you will not receive credit.
What are the principal advantages and principal disadvantages of lease financing? What would you recommend to a company considering purchasing / leasing cars for its staff? Why? Do not cut and paste a definition or you will not receive credit.