Finance strategy

Even with strong business performance, corporate value will not increase if the cash funding is raised or used unproperly. In particular, it is extremely dangerous to superficially assume that “debt is bad,” “all we need is profit” or “all we have to do is buy back shares or increase dividends to raise PBR” without a proper understanding of the investor’s finance theory.

First, it is important that a financial strategy has the following two key elements.

• An accurate understanding of the company’s financing costs and raise funds based on the optimal capital structure,
  and
• A capital allocation policy that maximizes available funds while properly managing working capital, boldly investing in growth, and effectively allocating surplus funds for shareholder returns.

The best companies are those who strike the perfect balance between raising capital through an optimal capital structure and managing capital through a solid capital allocation policy.