Principles of Corporate Finance Essay Example | Topics and Well Written Essays - 3250 words

Principles of Corporate Finance - Essay Example For example, the year 2008 witnessed a global financial crisis, which had a significant impact on the cash flows of firms that depend on banks for funding. Even if Timbercorp may not have been directly affected, it may have indirectly been affected by a reduction in demand for its products on a global scale as consumers find it difficult meeting up with payments. Secondly, the economic environment is constantly changing. Interest rates and exchange rates continue to change and this has an effect on Timbercorp’s financing and investment decisions. As earlier mentioned, the company is a leading participant in the agribusiness sector through the food and fiber industries and the land and water rights and infrastructure associated with these industries. The sector provides a lot of opportunities and threats. As far as opportunities are concerned, the agribusiness sector remains a crucial part of the global economy and it is estimated to be worth approximately US$5trillion. In addi tion to its importance for delivering food security, it also encompasses half of the world’s labor force and assets as well as 40% of consumer purchases. Global population is expected to grow to approximately 8.3billion by the year 2030. These developments will help boost demand for Timbercorp’s products. The company anticipates a 60% rise in the demand for food and fiber products by 2030. However, there are also challenges for the company. For example, the amount of arable land is declining and these may adversely affect the company’s ability to meet rising demand for its products. Other challenges facing the company include rising operational costs, limitations on the access of water resources, as well as rising oil and gas prices.  The company reports that high oil and gas prices had a material adverse impact on harvesting and transportation costs as well as on the costs of fertilizers.