Question

Explain financial strategies that you would advise a declining company to adopt

Explain financial strategies that you would advise a declining company to adopt

Homework Answers

Answer #1

Financial strategies for a declining company to adopt
1.The business should be run on cash and further debt should be avoided.
2. Investment if needed should be on projects with low payback period.
3. Inventory and overhead costs like salaries. Electricity bills, etc. should be reduced and stop giving credit to debtors.
4. The company should stop the operations and sell off the assets if it continues to lose cash from its operation.
5.The company should change its dividend policy and stop paying dividends.

6. It cabn plan to aquire smaller companies and gain higher market share and improve its cash flow.

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