Describe your takeaways on how debt and operating costs were addressed.
Discussion Question- must respond to all four bullets below:
• Locate and share a link to an article that discusses the issues of debt and operating costs in a business.
• Describe your takeaways on how debt and operating costs were addressed.
• Detail any of the following types of debt mentioned in the article:
o General obligations and revenue bonds
o Certificates of obligation
o Contractual obligations
o Commercial paper
o Capital leases
o Notes payable
• What recommendations would you have for this business to improve its budgeting situation?
RESPOND TO IN 60 WORDS
In researching, I found that AT&T was the most in debt company in the US. As of December 2021, they are $182.1 billion in debt. One way for this business to improve its budgeting situation would be to re-evaluate its budgeting plan. They also should evaluate the person in charge of creating the budget. They could include more checks and balances by involving more departments or teams. Their forecasts and budgets may need to be evaluated more often than usual. Instead of quarterly evaluations, they may need to go monthly until they get it right. They also should adjust their metrics requirements for employees to align with those of the projections. Goals may also need to be re-evaluated as well. It seems that they have teamed up with Warner to “update their strategy.” They plan to expand broadband, 5G along with fiber and wireless connectivity. In this plan, they want to expand their customer base by expanding their service location areas. More customers will have access in more locations.
RESPOND TO IN 60 WORDS
The article that I chose for this assignment is from Investopedia. They break down debt and operating costs into two common categories, fixed and variable. The fixed costs are costs that stay the same no matter the situation. The most common costs in this category are things like rent, insurance, property tax, certain salaries, etc. Examples of variable costs could be labor, operating supplies, materials, utilities and the like. These are costs that can changed based on the order size, inflation, hours worked and other deciding factors.
The article that I chose didn’t list any of those terms specifically, but they did list things very similar or things that may fall under some of those categories. For example, In the article it talks about labor costs and salaries, but these can be a type of contractual agreements. These would vary depending on the type business and the type of contact and the obligation it holds would determine the impact it would have on the business. Capital Lease isn’t mentioned in the article, but it does list rent and property tax which is related.
Finances work the same in a business as does anywhere else. You have to make more than you spend to turn a profit and if not you land in debt. If you’re in debt too long you’re out of business. A company may take on a debt or operating cost because they receive a specific type service or value which will then help provide revenue. My recommendation for a company would be to start slow, start small and don’t spend what you don’t have yet.