For this week, I’d like everyone to think in terms of a recession and ways that

firms can work their costs to increase their profits and stay afloat during times
of economic downturn. Be creative and pull on your past experiences with
employers, your own business, national chains, etc.
Further, tell a way that firms can utilize the time value of money during
recession or inflationary times to ensure that they’re not experiencing
devaluation.
Firms will work to increase their profits by maximizing efficiency and improving the cash flow. Costs will
be analyzed for any cuts that can be made. Some companies look to increase diversification in products
and services to help off-set loss in an economic decline. There will also be a focus on customer loyalty
and financially strategic marketing. Liquidity will be maintained, and cash kept on-hand as a reserve so
essentials like materials and payroll can be met. There may be a hold on capital projects due to higher
interest rates. Firms are less likely to invest in long-term assets and hold onto cash or borrow short term.
As interest rates rise, bonds and treasury bills are safer investments as they are viewed as less risky.
Walmart is a company that continues to perform successfully in recessionary times. It offers essentials,
such as groceries, pharmacy services, and gas. Walmart also offers products at a lower cost, as
consumers prefer bargain goods over quality in recession and times of higher unemployment rates.
Learning from the financial crisis and pandemic lessons, Walmart invested in technology creating more
efficient operations. Retailers are using augmented reality to stock shelves and place inventory orders
more efficiently.

In relation to the time value of money, interest rates have a direct impact on businesses and consumers
within the economy. Financing long-term assets is risky due to the uncertainty of the future interest
rates. As businesses are given higher interest rates, the business then charges consumers more to offset
the rates. Then consumers spend less overall, affecting the stock prices. The rising interest rates will lead
to an economic slowdown. As we come out of a recession and interest rates begin to decrease,
businesses will then shift to long-term borrowing and lock in lower rates. The funds then may be used to
pay off the short-term debt acquired or build working capital.