Growing companies

Growing companies

Growing companies face a range of challenges. As they grow, different opportunities and problems require different solutions. It is the responsibility of a company to find ways to keep up with the demand. In this case, McCormick& Company has to make a major decision on whether to invest in another factory to keep up with the demand as the company is strandedon whether it will yield good returns. One of the best determinants of whether McCormick & Company should invest in building another factory in Largo, Maryland,depends on their financial strength, which is demonstrated by their financial books. The companyis doing well financially according to their financial information, which is a big factor that can facilitate their decision to investin another new factory in Maryland. Besides, the fact that the company can borrow 70% of $ 4.424m ($3,096,800) and pay 30% of this money as cash down payment to finance the purchase of the land reinforces the decision of the company to invest in building a new factory.

When doing an investment, risk and returns are some of the best measures to consider when making investment decisions (Senthilnathan,2015). In an investment, different types of securities forming a portfolio may generally be employed to reduce risks. Particularly, when the returns’ combined results fromtwo stocks possess the same trend in a similar scenario, their returns are likely to be positively correlated(Senthilnathan, 2015). In this case, the new investment is expected to have positive returns,which is one of the reasonsMcCormick& Companymay considerinvesting in an additional factoryin Largo, Maryland.

References

Senthilnathan, S. (2015). Risk, return, and portfolio theory–A contextual note. Available at SSRN 2627423.https://www.researchgate.net/publication/309188986_Risk_Return_and_Portfolio_Theory_-_A_Contextual_Note