Investment Decisions The BP is a well-established company that diversified into business such as chemicals, coal, gas, minerals and nutrition that would improve the effectiveness of the company. This diversification strategy led to problems in allocating investment resources between the different division’s projects of the large conglomerate. According to Dayananda (2002), the investment has led to losses that demonstrate that the company could not successfully compete in the fiercely competitive international oil business while also trying to compete in other business. Owing to the volatile prices, BP shifted to the financial tool to help it to accomplish its strategies goals. According to Kent & Gerald (2011), the company began to concentrate primary on the investment business; problems of fitting corporate decisions into both the strategic and financial framework of the company are difficult to resolve. This led to a conclusion that the investment decisions were based upon dissimilar theories that sometimes contracted each other. BP investment growth focused on three areas of great interest; deep-water production, global gas including unconventional gas, and managing some of the major globe oilfields. In each field, BP has made significant advances. Financial Decisions Eugene & Michael (2010) demonstrate that finding useful financial tools to make informed investment decisions has traditionally been the point of interest of corporate financial officers. The most widely accepted financial decision focus mainly on a narrow range of internal variables, quantitative information, shorter-term results, control processes, and techniques to determine specific risks of the BP. McDonald (2001) indicate that BP outlined financial decisions to further enhance efficiency and condense costs within the company with the main purpose of improving its annual underlying pre-tax profitability. The company is expected to enhance capital efficiency and improve returns in the coming years. Finally, BP's financial management decisio
Name Instructor Task Date a) Discuss the main financial management decisions taken by BP (British Petroleum) and how they are related Financial management decision involve adopting an inventive, open-learning approach to introduce the main principles of financial management in an accessible, non-technical way that help the business to achieve its goals and objectives (Lawrence, 2011)…
The most important element for any business is the availability of the funds and finance. Almost all organisations make sure that they have the required funds in order to run the operations of the business in effective and efficient manner. Main issue in the starting of any business or organisation is to search for appropriate source of finance in order to make sure that the start-up funds are available (Johnson, & Scholes 2001).
It is generally observed in an economic scenario that the company with a good credit history and uplifted financial outlook is likely to raise funds easily as compared to the otherwise. Raising capital significantly affect the gearing of a company. Both modes of financing i.e.
By using the credit policy, an organisation sells its goods on credit to the customers. And after a certain period of time, the customers are required to pay back the credit amount to the organisation. But, sometimes, there are certain customers who are either unwilling to pay back money to the organisation.
Also when dividend policy is changed by company, the causes leading to such changes are reflected by the markets facilitating realignment of the stock prices. If a company has good track record of transparency and integrity, and there are proper justifications given for the change in dividend policy, shareholders are convinced about the need to change policy.
Conversely, the sum of money received in future is less valuable than it is today. In other words, the present worth of a pound received after sometime will be less than a pound received today. Since a pound received today has more value, individuals, as rational human beings, would naturally prefer current receipt to future receipts.
Perfect market is the market place in which the organisations are the price takers, as the price of share derived are based on the demand and supply of share in the marketplace. Furthermore, the investors relatively have significant
Optimal capitals structure describes the best equity debt ratio that maximizes the value of the firm. The concern is how the finances are raised and what factors drive to the managers’ decision for the chosen mix ratio. The next section critically evaluates whether
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