Speaking of AI, which we always are, this one’s about a problem we mentioned in class. How do you set a budget? Most everyone will have an ROI in mind, but how do you measure return on that spend? Is this a time where you re-think this decision criteria?
What is the downside of zero-based budgeting? Would you implement it at your firm when you become CFO? Why or why not?
If you were CFO, how would you set the budget for share repurchases? What factors would you consider? What are the accounting ramifications?
If you were in the C-suite, what would you recommend be done about the “problem” of so much cash? How would you spend it? How would you decide? Do you believe it is true that European “finance chiefs . . . are often more fiscally conservative than American counterparts”? If so, why do you think that is?
Dunkin’ Donuts plans to spend $100 million on “brand refresh.” DD does not own any of the stores, rather DD uses the franchise model. How will DD account for the amounts of the brand refresh that is spent on 1) equipment 2) technology infrastructure 3) training? Capitalize? Expense?
If you were CFO of Huntsman, your overseas cash just became cheaper and thus more accessible. What would you do with it? How would you decide?
Tesla is “burning cash,” yet CEO Musk does not want to address questions about capital needs. What do you think you would propose to him as sources of capital, should it be required? How would you decide on the mix of debt/equity?
So some firms need cash to invest in growth so they are selling “underperforming” assets. Do you think that maybe years of using cash flow to buy back stock has put some companies in this position? Why do firms buy back stock?
If you were CEO/CFO and repatriated cash, what would you do with the money? How would you decide? What pressures would you face from the different constituencies?
What is your opinion with respect to whether interest on debt should be deductible? Whom would eliminating the deductibility of interest hurt? Whom would it help?
If you were part of management, what criteria would be included in your decision about share repurchases?
If you were CEO or CFO of a firm, what are the various factors you would consider in whether to buy back stock, pay a dividend, and/or invest in capex? Do you agree that the current trend in the market is unsustainable? What do you foresee happening? When?
Do you find this plausible, namely that CPA credentialed CFOs are more risk averse with regard to investment decisions, compared to non-credentialed CFOs? What does this suggest for you in your career path?
In your opinion, are capex budgets leading indicators of firm (and economy-wide) performance? Are they required disclosures for public firms, and if so, do you know where they are disclosed in the SEC filings?
Many firms have the cash but CFOs are reluctant to spend it on maintaining or upgrading infrastructure. Why? If they don’t spend it, what pressures will they get from competing interests? If you were CFO of one of these companies, what would you do?
Shell has lowered its planned capex by $2 billion to $33 billion. Is this a material amount? Do you think the stock market reacts to such disclosures when they are made?
“Should” companies be investing more in capex and R&D, rather than buying back stock? Is it really a problem? How would you determine whether it is a problem, and for whom is it one?
How would you interpret the data re: revenues and capex? What other data or ratios would help you decide what’s happening? If you were the CEO of a firm, how would you set your capex budget?
