Concept of the Management of investment portfolio and its structure

The term Management of an investment portfolio structure refers to the percentage of Management of an investment portfolio (money) at work in a business by type. Broadly speaking, there are two forms of Management of an investment portfolio: equity Management of an investment portfolio and debt Management of an investment portfolio. Each has its own benefits and drawbacks and a substantial part of wise corporate stewardship and management is attempting to find the perfect Management of an investment portfolio structure in terms of risk / reward payoff for shareholders. This is true for Fortune 500 companies and for small business owners trying to determine how much of their startup money should come from a bank loan without endangering the business.

Let's look at each in detail:

· Equity Management of an investment portfolio: This refers to money put up and owned by the shareholders (owners). Typically, equity Management of an investment portfolio consists of two types: 1.) contributed Management of an investment portfolio, which is the money that was originally invested in the business in exchange for shares of stock or ownership and 2.) retained earnings, which represents profits from past years that have been kept by the company and used to strengthen the balance sheet or fund growth, acquisitions, or expansion.

Many consider equity Management of an investment portfolio to be the most expensive type of Management of an investment portfolio a company can utilize because its "cost" is the return the firm must earn to attract investment. A speculative mining company that is looking for silver in a remote region of Africa may require a much higher return on equity to get investors to purchase the stock than a firm such as Procter & Gamble, which sells everything from toothpaste and shampoo to detergent and beauty products.

· Debt Management of an investment portfolio: The debt Management of an investment portfolio in a company's Management of an investment portfolio structure refers to borrowed money that is at work in the business. The safest type is generally considered long-term bonds because the company has years, if not decades, to come up with the principal, while paying interest only in the meantime.

Other types of debt Management of an investment portfolio can include short-term commercial paper utilized by giants such as Wal-Mart and General Electric that amount to billions of dollars in 24-hour loans from the Management of an investment portfolio markets to meet day-to-day working Management of an investment portfolio requirements such as payroll and utility bills. The cost of debt Management of an investment portfolio in the Management of an investment portfolio structure depends on the health of the company's balance sheet - a triple AAA rated firm is going to be able to borrow at extremely low rates versus a speculative company with tons of debt, which may have to pay 15% or more in exchange for debt Management of an investment portfolio.

· Other Forms of Management of an investment portfolio: There are actually other forms of Management of an investment portfolio, such as vendor financing where a company can sell goods before they have to pay the bill to the vendor, that can drastically increase return on equity but don't cost the company anything. This was one of the secrets to Sam Walton's success at Wal-Mart. He was often able to sell Tide detergent before having to pay the bill to Procter & Gamble, in effect, using PG's money to grow his retailer. In the case of an insurance company, the policyholder "float" represents money that doesn't belong to the firm but that it gets to use and earn an investment on until it has to pay it out for accidents or medical bills, in the case of an auto insurer. The cost of other forms of Management of an investment portfolio in the Management of an investment portfolio structure varies greatly on a case-by-case basis and often comes down to the talent and discipline of managers.

Date: 2015-12-11; view: 787