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International Finance - Strategies - Essay Example

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International Finance - Strategies

As the share holders are the legal owners of the company, therefore management has the fiduciary obligation to act in the best interest of the share holders. Stock holders are often called shock absorbers as they provide risk capital to the company. The stock holders cushion the claims of other stake holders. The value of any company can decline by as much as the value of equity capital.

Without share holders and their equity, the companies would have all been financed by debts and would continuously face financial anguish which results in liquidation or bankruptcy.
The shareholder value approach favorable strategies, by compelling managers to review business strategies based on prospective cash flows. The more company ability to generate cash, the more it can distribute to its share holders. In short maximizing share holders wealth is equivalent to maximizing company's price

In order to attract the capital equity easily, many companies focus more on establishing share holder value. Capital equity is especially sensitive in those companies which are seeking to grow, and operates in a risky environment.

II BENEFITS OF COST REDUCTION FOR THE COMPANY:
Every business profit is calculated by deducting expenses from the business incomes.
The profit margin varies from business to business as the nature and size of the business requires different kinds of resources. The business needs resources for its development and each of this development has a cost to bear. No matter what type of business is your need human and financial resources needed to establish it. It is utmost responsibility of management of any company to provide quality resources at reasonable costs because they play vital role in the business....
The more company ability to generate cash, the more it can distribute to its share holders. In short maximizing share holders wealth is equivalent to maximizing company's price
In order to attract the capital equity easily, many companies focus more on establishing share holder value. Capital equity is especially sensitive in those companies which are seeking to grow, and operates in a risky environment.
The profit margin varies from business to business as the nature and size of the business requires different kinds of resources. The business needs resources for its development and each of this development has a cost to bear. No matter what type of business is your need human and financial resources needed to establish it. It is utmost responsibility of management of any company to provide quality resources at reasonable costs because they play vital role in the business.
Basically reduction in costs or expenses leads to the increase in the current income. Increase in current income means high profit margins. High profits margins brings high yield for the Share holders in the form of dividends and capital restructuring. ...Show more

Summary

Basically a share holder is the person, providing equity capital to any company and in return owns the company to the extent of his shares. As the partial owners, the stake holders share the profit and losses of the company in proportion to their share.
As the share holders are the legal owners of the company, therefore management has the fiduciary obligation to act in the best interest of the share holders…
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International Finance - Strategies essay example
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