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The value of potential #finance

Some companies pay their shareholder’s high dividends as a way of keeping investors but when profits don’t warrant it, they should cut dividends. The potential to pay dividends is enough to satisfy shareholders. After all, the profits instead of going to dividends go to reinvestment which in turn increased the company’s value and profits. This leads to the potential to pay higher dividends. We often miss the value of potential.

the value of potential

Value of potential

Solo Oil recently exchanged its share of licences in the Horse Hill oil exploration for an equivalent value in shares in UK Oil and Gas. Did it add value? I think it did but we have to look at the value of potential. By holding a share in those licenses they were committed to contributing to the development costs. Now they have relieved themselves of that potential cost and have an asset that can be potentially sold at any time. This is likely to be an asset that is much more likely to be favoured by the bank if they try to secure funding. They have also launched an open offer, to which I have subscribed that will effectively help them pay off debts and give the company, potentially, a more secure future.

Assessing the value of potential

Assessing the value of potential is about considering the future and what might happen if assets are used in an effective way that makes better use of those assets. This applies to company assets but also to human assets. Potential can often be hidden in plain sight! Who hasn’t looked at a piece of ‘waste’ ground and thought that it could be brought back into use?

The potential of people

People often end up on the scrap heap because no one can see their potential. This applies to young people and older people who feel undervalued once they retire. In the right conditions, the older people might see the value of potential in the young ones and help them learn the life skills they need.

Just being able to look at an empty can and think recycle rather than dump recognises the potential value. You can make a lot of money out of looking for the potential value and understanding the value of potential.

If today’s post has made you think a little you might like to subscribe by entering your email address at the top of the sidebar. You can also follow me on Twitter for links to the latest posts. Those links are also posted on my Facebook page.

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