Analysis and Management of a Company's Financial Risks (Essay Sample)
We would like you to write a short essay on the topic: Analysis and management of financial risks of the company. (Include at least one academic source, use APA 7th edition, word count 500 words +-10%).
Please, make sure it corresponds to the following requirements:
- At least 500 words long
- 12pt font, Times New Roman or Arial
- Double-spaced
- 1-inch margins on all sides
Your sample paper will be evaluated based on structure, vocabulary, grammar, spelling, and flow of ideas.
Please, make sure all the sources are properly cited. We do not tolerate plagiarism in any form.
Analysis and Management of a Company's Financial Risks
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Analysis and Management of a Company's Financial Risks
A business' primary objective is to expand its shareholders' wealth by earning profits. Pushing for such targets often leaves them susceptible to risks. Financial risks are primarily divided into three: liquidity risks, market rate, and credit risks. Since risk is an inherent component of any business enterprise, companies must enact informed measures to reduce cash flow volatility, maximizing performance. An effective and efficient financial risk management framework reduces exposure, creating a competitive advantage in the company's operational market. Therefore, companies analyze and manage financial risks through value proposition, sound debt management, prudent free cash flow provisions and adoption of a comprehensive business model.
Sometimes, businesses unknowingly borrow heavily in the name of funding their investment undertakings. While this can be advantageous, poor debt management reduces profitability and scares potential investors. Companies analyze their credit risk using financial ratios, such as debt-to-capital ratio, debt-to-equity ratio, and interest
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