Read the Ford Case Study and answer the 3 questions assigned Essay

Read the Ford Case Study and answer the 3 questions assigned - Essay Example This cash position seemed much more considerable when compared to the company’s $57 billion market capitalization in the year 2000. This cash accumulation seemed humongous and it needed proper allocation of this cash reserve to make sure that the company progresses smoothly and steadily in future. The cash position was almost half of the market capitalization i.e. the market value of the company at that time. The company’s directors decided to use the Value Enhancement Plan to distribute the cash amongst its shareholders. The alternatives for cash distribution would have been: Investing those funds into other profitable investments/ventures. Capital Expenditure i.e. by buying any machinery/equipment that can be used within the business for a long period of time. The Value Enhancement Plan (VEP) was designed to distribute cash amongst the shareholders of the company. Under the VEP, the existing shareholders would exchange their common or Class B share type one-for-one fo r a new share of the same type. Besides that, the shareholders had the right to receive $20 cash or $20 cash equivalent shares based upon the market value of the shares as on July 2000. The aim of the VEP was to ensure better flexibility, liquidity and alignment for its shareholders.