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Internal Sources of Cash

In: Corporate Restructuring

Author

Listed:
  • David E. Vance

    (School of Business Rutgers University)

Abstract

Raising capital for a corporate turnaround is difficult, time consuming and expensive. And at the end of the day, there is no guarantee a troubled company will find financing. So what are the alternatives? Companies, especially underperforming companies, tend to have more assets than they need in the form of accounts receivable, inventory and plant property and equipment. Excess assets have to be funded through either debt or equity, and to the extent those assets are funded by debt, they represent a drag on earnings. A company must grow or die and growth requires capital, not just for research and development, and not just for plant and equipment, but growth requires capital for accounts receivable and inventory. This chapter discusses methods for identifying excess assets so they can be converted to cash to fuel growth. It also discusses how to effectively use the assets a company has. Sometimes, a troubled company just needs money to stay alive. Missing a payroll can be fatal and failing to remit sales, excise or withholding taxes due can be equally devastating. In this chapter we consider a number of techniques to keep a company alive while it restructures.

Suggested Citation

  • David E. Vance, 2009. "Internal Sources of Cash," Springer Books, in: Corporate Restructuring, chapter 0, pages 213-231, Springer.
    • Handle: RePEc:spr:sprchp:978-3-642-01786-5_14
    DOI: 10.1007/978-3-642-01786-5_14
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