The world is getting smaller in terms of corporate interaction and accountability. Corporate finance is an important part of getting a decent return of any investment, especially if that investment is in another country. The main objective in capital management is to increase shareholder value, and that’s a challenge these days. It takes a whole lot of accountants to figure out how to operate with some sort of financial security in this global market, because there are so many variables. Managing assets in today’s business world takes ingenuity, foresight, an understanding of global economies and a little luck. Capital managers don’t like to use the word, luck, so a better term may be timing.
The global market is constantly changing. Capital management relies on factual global information, and the ability to use that information to protect the capital of the corporation. Managers are also accountable for using that information to produce results and increase shareholder confidence.
Canadian Solar’s general manager for the South American markets, Claudio Loureiro, is no stranger to capital management. Loureiro played an important role in launching Canadian Solar operations in South America. He established key partnerships, and he expanded the company’s customer base. Establishing partnerships and expanding the customer base are forms of capital management and accountability. Capital management is not just an accounting job to manage capital. Executives are also responsible for the financial security of the corporation, especially when operations are expanded to another part of the world.
Investment analysis plays an important role in capital management. The decision to finance a new investment with equity or debt can make that expansion a success or a bust. Executives should understand the current liabilities that may reduce company capital initially and in the future. That means managing inventories, cash and short-term borrowing. Corporate accountability and capital management start at the top, and it should be part of every employees mission.