Management of Current Operating Assets

Management of Current Operating Assets Name University Course Instructor Date Question 1: COVID-19: What did corporations do to "fortify" their balance sheet during the pandemic? In the COVID-19 period, there was enormous pressure on corporates, especially concerning their balance sheet problems, which required concretization to survive such shocks. Cash conservation was one of the principal initiatives accomplished with the help of cost containment (Deloitte, 2019). Businesses rapidly responded by adjusting operational costs by reducing capital outlay, not hiring, and offering reduced remuneration besides controlling all non-essential spending. For example, Walt Disney Company, one of the world's leading entertainment conglomerates, chose not to pay a dividend to retain cash during the early days of the pandemic (Zhou, 2024). This helped Disney concentrate more on operational activities and deal with the shock brought about by the closure of Disney's theme parks and movie theaters. Besides cutting costs, many corporations aim to improve their liquidity by obtaining external financing. Organizations such as Delta Airlines, which have been greatly affected by travel restrictions, could borrow billions of dollars to continue their operations (Cai et al., 2022). Likewise, against the sharp decrease in people's purchasing capabilities regarding vehicles, Ford Motor Company resorted to credit lines and new debts to hold adequate cash. Such external financing activities were a source of hope for many firms that experienced reduced revenues and helped to restore liquidity to survive. Companies also largely relied on uncertainties to control their debts to ensure their balance sheets were not compromised. This included continuation of existing debt and extension of maturities so that none of the firms faced immediate liquidity constraints. For instance, Carnival Corporation, one of the world's biggest cruise operators, experienced extensive order cancellations and recalls and had to cease operations (Bowen et al., 2014). As a result of these factors affecting the revenues, Carnival had to work hard to address the issues and risks that were associated with the debts when it had to release new bonds to cover the existing ones and ensure an adequate flow of cash to meet the necessary needs until the cruises could commence again. Like in the case of Carnival, long-term debt could be used to avoid short-term pressures because it allowed for debt maturities to be ex...