Restructuring in any organization is a difficult process that requires a lot of sacrificing and prudent financial management. For the case of AT & T organization, it is important to consider all the major loopholes and impediments affecting the organization. Indeed, it is critical to have the major company finances looked at, in order to minimize the unwanted expenses and get more revenue to fund developmental projects. Each organization has a basic demand that must be met before any other expenses can be incurred. It is for instance critical for AT & T to consider the payment of recurrent expenses as the only urgent concern at the moment. The cash position of the organization can best be reviewed by ensuring that at any time, assets are of more value as compared to the liabilities. It is imperative that as liabilities increase, they come with long term asses as well. Unjustifiable expenses on activities such as marketing; that are not often beneficial need to be monitored and greatly minimized (Pham, Yap, & Dowling, 2012).
Funding Growth Initiatives
Growth initiatives in the organization include; more off stations, a greater investment in manufacturing of telecommunication equipment and the consistent maintenance and expansion of network facilities. These are expensive ventures that require a lot of money to get done. In the organization’s the net assets often contribute greatly to the revenue. Annually, the revenue of $ 24 Billion can be justified due to the large infrastructure at the organization. The company nonetheless needs to scale down on operational expenses, that bring down the revenue of $ 163 Billion to the minimal net income of $ 24 Billion. One way to minimize this is to look at the operational expenses incurred by defunct assets. Assets that consistently require high maintenance costs ought to be liquidated. The organization also needs to consider a leaner Debt Vs Equity arrangement. There is need to ensure that the organization gets better credit facilities to offer them more affordable credit (Skogrand, et al., 2011).
The operating margin in the organization requires significant monitoring and restructuring. By having better debt terms, the organization can ensure that the liquidity ratio does not affect the income immensely. The dividend payouts need to be done on time as well. The dividend payout formula also needs to be predetermined. This way, all stakeholders can be aware of their impending dividends every time financial results are announced. Reinvestment of the income should be the first approach to grow the asset base. The company should announce major development plans and give the investors a profit dip warning. This will be due to the investment of the profit on development, as opposed to dividend payments. This however needs to be done in a phased way, to guarantee that the stock price is maintained (Pham, Yap, & Dowling, 2012).
Since the internal rate of return is the ratio that will be used to determine the success of the developmental projects and investments, it is critical to look at the factors affecting the internal rate of return. The most important factor that needs to be taken care of is the net present value. It is important to ensure that a re-evaluation of assets is done, so as to note the goal of improvement and the targets to be met. It is also crucial to look at different approaches to investments, that will minimize the investment cost. As long as the investment is kept low, the chances of loss will be greatly minimized. However, where there is little investment, the gain will be very marginal as well. It is thus paramount to invest in projects that have a short time to return and at the same time, with a low risk rating. This will require a lot of advice from the team and even as a CEO, it is important to gain some financial advice on this project (Pham, Yap, & Dowling, 2012).
Financial advice will assist the CEO in determining major cost-cutting measures, investment opportunities and significant loopholes that need to be sealed. Minimizing profit margins is a good approach but not the only one possible at the moment. It is critical to get financial ratios that tell the revenue growth trends. The organization needs to be clearly focused on the long-term growth, and not necessarily short-term gains. For this to happen, there will be need for major risk taking. These risks will definitely affect the cash position of the organization. The current position should however not be affected to the extent that it can affect the credit rating of the organization. Many standards need to be maintained. One of these standards is the debt to equity ratio. Short term investment goals will retain the ratio while the long-term investment goals may greatly affect the debt to equity ratio c.
In order to grow the organization, it is important to consider all factors. Financial management requires prudent and precise planning. One major plan will be on how to handle cash flow. Liquidity cannot be compromised in this organization as there are many consumer issues and interactions that require cash transactions to be made. The organizations partnering with AT&T also need to effectively take the upper hand with regard to the investment on projects. This will ensure that even as the organization (AT&T) restructures, it does not affect the business processes. The investments to be made need not demonstrate organizational weaknesses but strengths. The goal is to boost consumer and investor confidence at all times (Jain, Singh, & Yadav, 2013).
Abanis, T., Sunday, A., Burani, A., & Eliabu, B. (2013). Financial management practices in small and medium enterprises in selected districts in Western Uganda. Research Journal of Finance and Accounting, 4(2).
Jain, P. K., Singh, S., & Yadav, S. S. (2013). Financial management practices. In An empirical study of Indian corporates (Vol. 3, pp. 265-278). Springer New Delhi.
Pham, T. H., Yap, K., & Dowling, N. A. (2012). The impact of financial management practices and financial attitudes on the relationship between materialism and compulsive buying. Journal of Economic Psychology, 33(3), 461-470.
Skogrand, L., Johnson, A. C., Horrocks, A. M., & DeFrain, J. (2011). Financial management practices of couples with great marriages. Journal of Family and Economic Issues, 32(1), 27-35.
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