Discussion Question Essay Example | Topics and Well Written Essays - 250 words - 14

Discussion Question - Essay Example This is in the light of capital constraints, where each of the affiliates to the company provides a suitable ground for shareholder value maximization. Shifting capital in this case would be informed by the performance of each affiliate prior to capital shifting and the extent of value maximization required. Capital should be shifted from relatively low performing affiliates to relatively high performing ones, allowing for diversification of shareholder value maximization. Managing working capital is critical to the daily operations undertaken by the company (Brigham & Ehrhardt, 2010). This is more so in line with the relationship between working capital and inventory portfolio. Increase in inventory costs restrains the production capacity of the firm. As a result, working capital becomes directly involved due to the fact that inventories are dealt with every single day. Production needs to flow, and the production capacity should improve as opposed to deteriorating. In this regard, the financial manager of the company should devote more time in managing working capital in such a way that mainstreams the inventory