Macroeconomic Variables: Primary Indicators of Present Economic Trends
Reflect on everything that you have learned in the course. What macroeconomic variable do you think corporate financial managers should be preparing for in the next 5 to 10 years? What concepts and/or skills learned in this class will prepare you for the impact of this variable in your professional or personal life? Please explain and provide specific examples.
Things we learned:
we studied macroeconomic variables and their impact on corporate finance. The purpose of understanding macroeconomic variables was to ensure alignment with strategic variables.
we were introduced to how to value stock and bonds. This information is quite important as it leads us into Module 5. Understanding how to value stocks and bonds is a way of understanding how companies raise working capital for major projects and other potential investments.
In Module Five, we will change our direction and focus on the Cost of Capital. In other words, what methods do companies use to raise working capital and what are the costs associated with each option? We briefly addressed this topic to degree in Module 4.
Reflection
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Reflection
Macroeconomic variables serve as the primary indicators of present economic trends. In the next five to ten years, business financial managers should be planning for inflation. Inflation is the rate at which the value of money falls, resulting in the rise of overall price levels for commodities and services. According to predictions, inflation will likely rise in five to ten years (Dräger et al., 2022). Uncertainty and prices could escalate as inflation increases. High inflation hurts the profits of a business. It could also have a negative impact on the company's profitability and lead to excessive pay expenditures. To counteract the projected adverse effects of rising inflation, financial managers must brace themselves in various ways. The best way to prepare is to do a complete risk analysis, establish a thorough gras...
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