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Corporations have hundreds and sometimes thousands of shareholders who buy their shares to maximize the value of their investments. The operations of a company are directed by its business goals and objectives and a need for sustainability to yield long-term profits.

So the question arises; can a company achieve all of its goals solely through its core business operations?

That’s where corporate investment comes in. It’s a tool that helps companies maximize their profits and shareholder value. Like individuals, companies also invest in different financial products to achieve their strategic objectives. A balanced portfolio is what increases the probability of success for their investments.

Here are some ways to create a balanced portfolio.


Identify your investment needs

Your investment strategy should be driven by your business’ policy statement and goals that describe why you want to invest and how you’ll use the returns on your investment.

For example, if the expansion plan of your company includes opening a new branch in another city, you can invest the surplus profits from the existing business units in high-margin assets to multiply your profits and use the returns on the new business unit. But if your goal is to integrate stability in your cash flows, you’ll probably look for safer investments.

Diversify your investments

Warren Buffet once said, “Don’t put all your eggs in one basket.” This is exactly how you can create a balanced portfolio. Diversify your investments by spreading them over different asset classes so if one asset devalues, you can still make a profit from other assets, which minimizes the overall risk in your portfolio in the long run.

Types of investments

Many companies invest in stocks, bonds, and other securities to increase their net worth, generate additional income, and keep the cash flow steady, even during an economic crisis.

Venture capital and firm acquisitions are also a good way to keep your investment portfolio balanced. Large companies invest in early-stage firms or start-ups that have high growth potentials. The acquisitions involve a transfer of ownership of an entity, usually a small company, to a larger firm.

The diversification goal applies even when you’re investing within the same asset class. For example, if you’re a manufacturing company that’s affected due to inflation, you’ll want to invest in companies in a different industry so you have an ongoing cash stream to help you sustain your business operations.

You can learn more about corporate finance here at Money Cash & Value.

Tensions arise as stocks plummet with discord between the U.S. and China. Wall Street, one of the biggest financial hubs of the world, expects the U.S. economy to take more hits with this trade war between both super powers. Analysts and strategists see a general decline in the global economy too—such is the power of these two nations—neither of whom shows any signs of wavering.

What does this mean for the economy?

With no signs of improvement in sight, experts predict an increase in tariffs and taxation—as if the increase from 10% to 25% wasn’t damaging enough—on Chinese goods, in an ongoing effort to prevent Chinese firms from going through with their acquisitions of U.S. firms and property. As a retort, earlier last month, the U.S. blacklisted Huawei, a Chinese telecom firm from acquiring U.S. components. Overall there is a growing aversion to Chinese involvement in the tech sector, which is a fast growing industry across the world. This tussle for power could affect companies working in collaboration, provided that the U.S. is one of the major tech innovators in the world, and China one of the largest producers of tech products.

What will happen to business owners?

This cut off between both countries is detrimental to the efforts of business owners that depended on each other’s efforts and the markets each country provided, which is why it’s equally distressing for Chinese companies to get cut off from Wall Street, the U.S. financial market that has helped them earn billions in the past.

Though political and financial in nature, Wall Street is at risk of becoming a battleground for these state level trade wars. The trickledown effect of which will be suffered by businesses and individuals not just in these countries but the world over, especially the global south.

To add fuel to the fire, there is an aversion and fear of China’s influence in the American stock market, which has led to an escalation of tensions rather than dissipation.

Keep up to date with the latest news from the world of finance by logging on to our website moneycashvalue.com.

Though the act was passed in 2017, the Trump Tax Cuts Act is still a hot topic in the world of finance because of the changes it introduces. There are still seven income brackets but tax rates are lower in general. What this implies for small businesses are certain drawbacks and certain benefits.

Small business owners are generally seeing larger returns, but there is no real clarity on how to classify the various types of small businesses including S-corporations, sole proprietorships, partnerships and so forth land. Businesses and their accountants are trying hard to understand if their respective business qualifies to gain from this 20% tax break. IRS worked through most of 2018 and early 2019 to help define more clearly which businesses and industries would be able to benefit from this change in policy.

So what’s the big deal?

It is a win for small businesses however, to be able to retain profits and increase returns, often suffering from losses in the form of deductions. Rules now are more stringent when trying to determine who can make what and how far they’re qualified to benefit from these changes.

For instance, the ability to take the deduction changes depending on the filer’s marital status, with single filers being disqualified at certain amounts, and married filers at another. If their income in certain fields exceeds a set limit, they’re moved up to a higher tax bracket and thus owe greater taxes. For Specified Service Trade or Businesses (SSTB) the rules vary slightly in their inability to take the deduction if their income goes over $207,500 as single filers and $415,000 as married filers.

It’s what makes the already confusing phenomenon of taxation even more confusing as people try to understand how they can run their businesses and remain taxpayers.

To know more about how taxation works, you can get in touch with me at moneycashvalue.com.

When you invest your money, you spend hours researching different investment options, markets, past growth trends and future potential. Firms do the same; except that their stakes are higher, they spend months in making their investment plans and require a team of experienced financial experts who know the financial markets inside out.

Not every firm wants to or can make an internal investment department so they outsource their investment management. Here are 3 things you need to know about outsourcing your investment management needs.

It’s a growing trend

The outsourcing investment trend gained its initial popularity among small firms who couldn’t afford to make an investment team but now even large corporations and institutional investors are opting for it to manage their multi-billion dollar investments as it provides better profit prospects, improved risk management, and greater compliance with the complex regulatory framework. According to a report, in 2017, the global value of outsourced investing assets reached $1.69 trillion with an annual percentage increase of 11.3%.

It reduces costs

Like any other outsourcing decisions, companies outsource their investment planning to reduce costs. Imagine the salaries of investment experts, material costs, utilities, and overhead expenses that’ll incur if you hire an in-house investment team. And if you choose not to have experts do the job for you, you’ll be risking all your investments. Outsourcing investment management is a cost-effective option and involves hiring an outsourced chief investment officer (OCIO) or a Strategic Investment Group and delegate all or part of your investment management to them.

It increases returns on your investment

The main business function of an OCIO or Strategic Investment Group is to invest in financial products so they operate in the financial market, have all the insights and can respond to dynamic market conditions to maximize your return on investments. They use their expertise, knowledge, and experience to manage your investment portfolio and help you achieve your investment objectives.

If you’d like to understand more about how outsourcing investment can help companies, visit moneycashandvalue.com. We have a host of resources that can help you take your business to the next level!

The United States stock market is on fire. In fact, all three major stock indices are trading near their all-time highs. If any optimistic news breaks on the trade dispute with China, stocks are certain to blow past prior records.

That being said, many financial experts are warning that the market is overpriced. To reach this conclusion, many rely on valuations like forward price earnings (PE) ratios.

However, it is our experience that these conventional valuation strategies miss the mark. The truth is that business valuation methods are incredibly complex.

However, there is one indicator that does not lie and that is cash. Read on for a guide to understanding business valuation methods.

Price to Earnings Ratio

One of the most popular valuation metrics is PE ratios. Simply put, this compares a stock’s price against its earnings.

However, this method is flawed because earnings reports can be manipulated. To make earnings look better than they actually are, corporate accountants apply adjustments that are not transparent to the average investor.

For example, some accountants use rule changes to slide earnings to different reporting periods. While the business base remains unchanged, it gives investors the perception that earnings have increased.

Another major issue with PE ratios is that assets and liabilities are not included in the formula. The simplistic nature of the PE ratio glosses over companies with substantial operating cash flow on hand. It also does not place weight on companies with unacceptable levels of debt.

Lastly, statistical analysis disproves any correlation between earnings and value. Companies with high earnings per share (EPS) growth do not produce higher PE multiples.

Rely on Cash Instead

Several valuation methods rely on free cash flow instead. This is a better strategy as companies with cash on hand are healthier than those with massive debt.

One evaluation strategy is referred to as a discounted cash flow model (DCF). The DCF model is based on future cash flows. When the DCF value is higher than the share price, it means a buying opportunity is present.

It is important to use the DCF model only for companies that do not give a dividend. Companies that provide a dividend are certain to calculate a negative DCF value.

When a dividend is present, experts turn to free cash flow instead. This involves calculating the delta between operating cash flow and capital expenditures.

Another popular indicator is price-to-cash flow (P/CF). This calculation is simple like the PE ratio, however, uses operating cash flow per share instead of earnings.

What the P/CF ratio reveals is how much an investor is willing to pay for cash flow. Consider a company trading for $50 and having operating cash flow of $5 per share. For every dollar of cash flow, investors are amenable to paying $10 per share.

A Recap of Business Valuation Methods

Every investor has their own magical formula to evaluate stocks. Our advice is to express skepticism towards methods relying on earnings. Instead, the best approach in our experience is to review the company’s cash position.

If you enjoyed this article about different valuation methods, check out our corporate finance blog for other great content.

Statistics have shown less than 64% of small businesses have a website. This is because 35% of small business owners feel that their operations are too small to warrant websites. But is this true?

Owning a website has the potential to grow your business by a wide margin. 80% of internet users are shopping for the goods they need online. This means that you might reach people who are not just within the neighborhood you operate in.

Sometimes, your customers will order products from different states. This will help your business grow even faster than marketing yourself through traditional methods.

However, creating a website is not always a simple task. It can be time consuming and exhausting. That is why you might want to consider buying one.

Before you buy a website, there are a few things you need to be aware of. This will help you avoid costly mistakes that will derail your business.

1. Buy a Website That Is Established

You may be spending a great deal of money when making your purchases. Therefore, when you buy one, you need to make sure that it will start making money for you right away.

If it is already providing you with revenue at purchase, that is a great sign. Find an excellent website that is user-friendly and easy to navigate.

The ideal person to buy from is an individual who created a successful blog, but they have no time to maintain it and keep posting new articles.

This may be because they have an offline job or are working on yet another website in another niche.

2. The Niche

A huge mistake that people make is buying websites based on niches they do not understand. For one, you will not enjoy the process of finding and posting content you are unfamiliar and uninterested in.

Of course, you can buy one and hire someone to maintain it. Or, you can do the maintenance yourself but hire writers to come up with the content for you.

However, if you are passionate about the niche, there are higher chances that you will make more money because you will know the trends to look out for. Remember that running the website is much more than just posting content.

If you are buying a website for your business, you have to make sure that it is in the same niche. How will you post products on skin care in a website that attracts users from the construction and renovation industries?

3. You May Want To Purchase a Competitor

This is if you need to buy more than one website. Today, we have seen more prominent companies purchase the sites and social media pages of competitor companies.

The trick here is to ensure that the competitor is actually a significant threat. But do not start posting your products on this site because it might confuse customers and you will end up losing them.

4. Can It Be A Sister Website?

If you already own a website, you might still need to buy one that will be a sister website to your own. For instance, if you are in the skin care industry, you may want to buy a website that reviews the best products and applicators.

Not only is this a great addition, but it is also a great blogging strategy. Cross promoting your website can increase your customer base and tighten your brand name. You have to be careful so that you make the right choice.

5. Will It Add Some SEO Value?

Other than looking at the domain, you need to find out whether the website has some linkable content. This may not always be a legitimate SEO practice, but it certainly gets you more customers.

You need to consider whether the site already has SEO value that you can step into and get the rankings your business need, or if you can use it as a backlink to your current website.

Even if these rankings are not necessarily making you any money, they are essential. If you have specific knowledge, ranking for quality keywords can return significant profits to your business.

You also need to pull up the history and check why the person is abandoning the site. In some cases, they may have built-in URLs with spammy content and are getting penalized.

If the SEO and linking are not good, you may have to pass on that offer because it may take a lot of work to get it back up.

You also want to avoid sites that aren’t fully-fine-tuned because these have less potential for growth. You will also see that their annual and monthly ratings are not as high. So look for one where you can start reaping benefits immediately in either traffic generation or conversion optimization.

6. Know Who Is Selling

This digital era is a dangerous one. Some people will hack into website backends and claim that the sites are theirs.

They will then sell you these websites. Once the original owner gets back their control, and they almost always do, you will end up losing your money.

There are tools that you can use like Domain History, to know the ownership history and how it has changed in the past. If you notice any strange patterns, forget about buying it. These details will also come in handy after you buy.

7. Check the Details of Expenses and Revenue

This is a critical aspect to look at. Sometimes it will be simple while other times it will be complicated. But, you can always consult your business advisor or accountant to make sure that you do not miss anything critical.

Basically, you have to make sure that it is earning revenue, that the revenue is consistent, the details are real, and that it is sustainable in the long term.

Getting Started 

Never buy a website with poorly researched content or bad English unless you have the time and money to hire a professional editor.  Ensure you do your research thoroughly before making the final decision to avoid losing money.

If you need more tips on the right areas to invest your money, visit our website.

If you’re interested in taking your business to the next level or shoring up some areas of liability, getting a reasonable loan can be useful.

To this end, it’s vital that you learn the ins and outs of applying for a business loan so that you can avoid the common mistakes that trip up a lot of companies.

The points in this article will help you avoid those mistakes so that your application goes through with flying colors.

1. Biting Off More Than You Can Chew

Part of corporate finance is knowing how much money you can spend in any given area. You fail to do your due diligence in this regard if you’re taking on loans that are too expensive for you to reasonably pay back.

It can seem like all is right with the world once the loan deposit hits your bank account, but you’ll be in a rude awakening when it’s time to settle the account if you aren’t careful.

Always run some serious analytics on how much you can afford so that you can avoid this problem.

2. Failing to Get a Credit Report

Your company’s credit is its bread and butter when it comes to seeking lending.

However, you can’t get optimum lending if you don’t even know where you stand. Pull the report and make sure that your score glows before you reach out to lenders.

While you can still get lending with suboptimal credit, the terms will often be too debilitating to come back from.

3. Doing Business with Shady Lenders

You should also do deep and thorough research into any company that you accept a loan from.

Ensure that they don’t have litigation related to unethical and illegal practices, and also research their Better Business Bureau rating. Taking the time to do this will help you make the best decisions when it comes to your finances.

4. Not Fully Understanding Interest Rates, Terms, and Fees

When applying for a loan, you need to be especially mindful of the interest rates, terms, and fees.

There are many loans where the interest rate escalates over a certain period of time or fees are subject to change at the lender’s discretion. A lot of companies become ignorant of these sorts of things because they fail to fully go over the terms.

Not only should you go over them, but also pass them along to your lawyer and accountant for further review.

5. Failing to Make Your Accounts Look Favorable

You run the risk of making your company look cash poor if you don’t regularly make deposits into your accounts. Likewise, if you routinely deal with NSF returns, this can be enough to make lenders steer clear.

Give yourself 6 months to a year to make your accounts look as healthy and favorable as possible before applying for any loan.

Consider These Business Loan Mistakes

These are the matters that come into play when it comes to getting a business loan. If you can avoid these mistakes, you’ll have a much better time getting the lending that you are seeking.

For more financial information, stay tuned to our posts.

Getting into the game with your business can be both inspirational and anxiety-inducing. If you are trying to give your budding company some legs, reaching out to an investment banker is one of the next steps.

However, it’s important that you learn more about why investment banking can be a valuable tool for you.

Consider these tips so that you can get the most out of your company through the assistance of an investment banker.

Financial experts help to make complex matters simple, which is why you need them on your side.

In this regard, financial modeling is one of the most worthwhile services you can take advantage of. This matters might be perplexing if you aren’t familiar, but embracing this information can improve your business to the fullest.

Start with these tips to make the most out of financial modeling.