To respond quickly and with good pricing and terms, lenders and investors need to be familiar with the company's management, plans, competitive position and outlook. Companies should use as many debt markets as they can manage efficiently. For smaller, higher-risk companies that might be the domestic bank and private equity markets. For larger, lower risk companies that might be the domestic bank and off-shore public commercial paper, medium term note, bond or equity markets, as well as the bank market. A company's financial strategy involves trade-offs among the returns it tries to provide shareholders, the investment it must make to produce those returns and the capital structure it uses to finance those investments.
Companies deliver returns to shareholders through dividend payments and earnings growth.
They sustain growth by investing in working capital and property, plant and equipment, and they use debt and equity to finance those outlays. Dividends For public companies in mature industries and for many private companies, dividends are a regular use of cash. Public companies are very reluctant to cut dividends because investors consider them an important indicator of share value, and private shareholders often rely on dividends for income. Most companies will reduce their dividends or eliminate them only when they are in severe difficulty. They use it for the working capital and capital expenditures necessary to maintain or expand their market positions.