Identify the Sources and Uses of Capital for Companies in Different Stages of the Corporate Lifecycle

Action of the week

Background: Companies can obtain capital from four sources: equity raises, debt issuance, operations and asset sales. They can use excess cash to reduce debt, invest internally in improvements or expansion of operations or externally in mergers and acquisitions or distribute it to shareholders through dividends or stock buybacks.

Rationale: The primary source and preferred uses of capital differ depending on a company’s financial condition and its stage in the corporate lifecycle (startup, growth, maturity, decline).

Action: For each corporate lifecycle stage, select one company you own. Download their latest annual reports and identify their main source and primary use of cash.