A company has many decisions to make when it comes to growth and finances. The company must evaluate how to grow, how much growth is sustainable, and how to finance that growth. The company has to choose which financial instruments (and how much of each) should be used to create sustainable financing higher than the hurdle rate, and above the expected rate of return for investors. One company may decide that financing capital for new projects is more economical, where another may choose debt financing. These decisions allow the company to better budget and plan for the future.
Sustainable Growth Rate FirstEnergy’s 2015 Annual Report opens with a message to shareholders from Charles E. Jones, President and CEO, expressing the amount of focus …show more content…
As of December 31, 2015 and 2014, FirstEnergy had approximately $82 million and $79 million, respectively, of restricted cash included in Other Current Assets on the Consolidated Balance Sheets (FirstEnergy Corp., p.37).
“Net cash provided from operating activities was $3,447 million during 2015, $2,713 million during 2014 and $2,662 million during 2013. Cash flows from operations increased $734 million in 2015 compared with 2014” (FirstEnergy Corp., p.37). Though FirstEnergy’s “most significant sources of cash are derived from electric services provided by its utility operating subsidiaries and the sale of energy and related products and services by its unregulated and competitive subsidiaries”, FirstEnergy also uses financial instruments such as notes, bonds, and loans. In 2015, cash “used for financing activities was $279 million compared to $513 million and $477 million of net cash provided from financing activities during 2014 and 2013, respectively” (FirstEnergy Corp., …show more content…
The proceeds received from the issuance of the senior notes were used to repay a portion of JCP&L’s short-term borrowings under the FirstEnergy regulated companies’ money pool and an external revolving credit facility” (FirstEnergy Corp., p.38). “In October 2015, TrAIL issued $75 million of 3.76% senior notes due May 2025. The proceeds resulting from the issuance of the senior notes were used: (i) to fund capital expenditures, including with respect to TrAIL’s transmission expansions plans; and (ii) for working capital needs and other general business purposes” (FirstEnergy Corp.,
Sustainable Growth Rate FirstEnergy’s 2015 Annual Report opens with a message to shareholders from Charles E. Jones, President and CEO, expressing the amount of focus …show more content…
As of December 31, 2015 and 2014, FirstEnergy had approximately $82 million and $79 million, respectively, of restricted cash included in Other Current Assets on the Consolidated Balance Sheets (FirstEnergy Corp., p.37).
“Net cash provided from operating activities was $3,447 million during 2015, $2,713 million during 2014 and $2,662 million during 2013. Cash flows from operations increased $734 million in 2015 compared with 2014” (FirstEnergy Corp., p.37). Though FirstEnergy’s “most significant sources of cash are derived from electric services provided by its utility operating subsidiaries and the sale of energy and related products and services by its unregulated and competitive subsidiaries”, FirstEnergy also uses financial instruments such as notes, bonds, and loans. In 2015, cash “used for financing activities was $279 million compared to $513 million and $477 million of net cash provided from financing activities during 2014 and 2013, respectively” (FirstEnergy Corp., …show more content…
The proceeds received from the issuance of the senior notes were used to repay a portion of JCP&L’s short-term borrowings under the FirstEnergy regulated companies’ money pool and an external revolving credit facility” (FirstEnergy Corp., p.38). “In October 2015, TrAIL issued $75 million of 3.76% senior notes due May 2025. The proceeds resulting from the issuance of the senior notes were used: (i) to fund capital expenditures, including with respect to TrAIL’s transmission expansions plans; and (ii) for working capital needs and other general business purposes” (FirstEnergy Corp.,