Topic:

There is a common phrase in business: "Cash is king." "Cash flow is the life-blood of a company. Without it, a company will fail" (Hicks, 2012).

Yet, companies often have to take risks that could potentially jeopardize their cash flow (e.g., new projects, growth, capital budgeting, etc.). Assume you are the CFO of a struggling company.

While you do have a positive cash flow, it is minimal at best. If something does not change soon, the company will go under.

Fortunately, your product development team has just created a new product that will not only save the company from financial demise but will also revolutionize how the industry does business.

The problem is that the product is still 2 years away from being able to be sold to the public, and you will run out of cash within the next 6 months.

How would you propose obtaining the funds needed to keep the company alive and thriving for the next 2 years until you are able to see a return on the product development? How would you keep the stakeholders happy?

Suggestions for Instructor:

Cash flow is measured by the movement of cash in and out of a company, and is a way of measuring their financial stability. The expected value of a company is the amount of money it is expected to profit in a given amount of time.

If an investor thinks a company is not going to meet its expected value they may pull their money out of the investment. Therefore, this share value decreases and allows other investor to buy the stock at a lower premium.

Those investors are going to make a greater profit if that company in the end meets its expected value.

Cash flow is a much better estimate of a company's worth. Simply speaking, cash is much easier to utilize in the market versus other tangible assets. So, it can be understood that any company that has available cash can operate much smoother in the industry and gain a greater stability in the market.

Liquidation of assets depends on the assets value in the current market. The outcome of asset liquidation may not produce the cash that is needed or required for operations. Thus, cash is critical to any business operations or existence. The bottom line is that cash determines the health of the company.

Stock values are assessed to a company based on the value assigned to the company. Typically this number is based on cash flow, marketability, P/E ratio, etc.

The stock value can be too low or too high and may not be based on actual cash availability. There may be inflators in the stock value that can fluctuate based on the current market and the stock value may not be truly an accurate estimate of the company's worth.

Instructions:

You are required to submit a thread of at least 300 words in response to the provided prompt for each forum. In addition to the thread, you must reply to at least 2 classmate's threads. Each reply must be at least 150 words. For each thread, you must support your assertions with at least 2 citations in current APA format. Each reply must cite at least 1 source and include biblical integration. Acceptable sources include the textbook, the Bible, and scholarly, peer-reviewed journal articles.

More Suggestions:

Here are a few general notes on the DBs:

Substantive means, "with substance." Avoid filling your posts with writing that does not add anything to the discussion.

Be clear, concise, and to the point. 300 words is the guideline, quality over quantity.

Find your own references. Do not just use the same references that a person who posted before you found.

Avoid quoting from the textbook since this does not add to the discussion (since all of you are reading the same information).

If you paraphrase, be certain the reader can decipher what is your original thought versus what you are borrowing and use proper citations (APA format required)

Avoid the use of excessive quotes and long quotations.