Corporate finance

Corporate finances are those that are related to the analysis and study of business variables that maximize shareholder value .

For this, economic decisions are made through different tools in order to create capital, grow and acquire more businesses.

This area of ​​study covers the valuation of assets and the decisions that are made for the proper functioning of the company as well as its development.

Corporate finance encompasses important investment decisions such as:

  • Remuneration of dividends,
  • The  self – financingor external financing ,
  • The level of indebtedness and leverage,
  • The optimization of the risk-benefit ratio, its liquiditylevel  ,
  • The need for investment to develop
  • Assessing the opportunity cost of an investment, the financial model to adopt and los terms of repayment .
  • The efficiency of cash flows.

Areas covered by corporate finance

Corporate finance encompasses the following activities within a company:

  1. Mergers and Acquisitionsthat affect the company known as M&A (Mergers & Acquisitions).
  2. Project financing, known in English as “Project Finance”.
  3. Capital structure, financial models and investment models.
  4. Legal structure of the company.
  5. Venture capital(“Private Equity” in English) and value creation models and private investment capital.
  6. Dividend policy and dividend discount.
  7. Cost of capital, level of indebtedness and financial leverage.
  8. Development of investment banking.
  9. Share Issuance Policy.
  10. Corporate restructuring.
  11. Ethics and corporate social responsibility.

All these sets of activities are very important for the management of a company. Its success is based on the correct decision making around these variables and other equally important ones, such as the development of professional careers for employees and the incentive or motivation policy for the work to be carried out with attitude and efficiency, which They are the most important elements for the company to grow steadily over time.

While it is true that strategic corporate movements are vital for the survival of the company, such as the search for alliances, international expansion plans, acquisition of competitive companies and the search for information to develop the business more efficiently or the degree of sophistication of the company. In the latter case we can highlight the Apple company from the point of view of marketing , since it is in the mouth of all people because of the degree of comfort and modernity that their infrastructure and facilities have.

by Abdullah Sam
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