| In brief it comes down to cost of capital. There is X cost to holding debt, and Y cost of holding cash. The cost of debt is pretty clear - its the interest rate. The cost of cash/equity is the opportunity cost of what you could be doing with it. (Either invest or spend it on growth or if none of the above are viable, then give it to the investors who can use it more effectively) A CFO's job is to figure out the lowest possible cost of capital the firm can obtain, by having the right loans and investments and cash on hand as required. Many companies may even find carrying debt to be cheaper than holding cash. Doing moral good is a great thing, but its not part of the remit. Now if you had a firm which does "good". You would usually do that through a different set of vehicles - you could support a foundation (which has tax breaks too! so makes even more sense). There are lots of ways you can incorporate moral good into your daily activities and there are many incentives by the government to encourage such behavior. Very few incentives though (if any) are centered around the concept of repaying loans to the govt faster so that they could * hypothetically* use the loans for something else equally or more worthy. Especially since govt loans are usually part of a programme that has a corpus decided by legislation which matters more to disbursement than repayment. |