Corporate Finance has three main area of concerns : capital budgeting, capital structure, and working capital. Corporate Finance is often concerned with maximizing shareholder value through long- and short-term financial planning and the implementation of various strategies. It activities range from capital investment to tax considerations.
It is directly related to company decisions that have financial or monetary impact .It refers to activities and transactions related to raising capital to create, acquire & develop business.
Types of Corporate Finance:
Corporate financing includes raising funds, either by the way of equity or debt.
1)Owner’s Fund- Equity or ownership finance is strictly limited to raising capital for the owners of the company.
2)Debt Funds- Also knows as External Finance. It comes in multiple options like debentures, corporate loans, private financing etc.
Importance of Corporate Finance:
Large Companies need data insights that can support decision them decision to like:
1)Managing of liabilities, capital investments and assests.
2)Shareholder dividends issue.
3)Proposals of investment option.
Nature of Corporate Finance:
Corporate is a Financial planning for a company. It includes preparation, raising fund, investing plus tracking each finance of organisation .It research , technique and strategies are defined by each financial department through that finance supervisor.
The main goal of corporate finance are to maximize profits, giving good dividends to shareholders, as well as creating fund reserves for future expansion activities.
The nature of corporate finance notes every company is to optimize investing need for maximizing profit. It can be used to quickly attain your investing objectives of the company.
Finance can be accumulated through share banks loans, debentures, etc. Its most hard for newer since provider in order to collect finance as their investor do not have confident and vision towards new business.
5)Dynamic in nature:
It goes on changing in circumstances, planning, project delay. Time etc. Your finance supervisor must suggestion new and innovative ideas to utilize saving,
6)Managing and Controlling:
Control is needed to find whether the finance are optimized and invested appropriately. If the finance is not utilized properly then corrective steps should be taken and may also need to restructure the way finance is been utilized.
The company need to take the appropriate permission, from the finance regulatory board of the country for the rising finance from public. The features of corporate finance need to taken utmost care when raising funds.
Scope of Corporate Finance:
1)Decision Making after-in depth market research around raising capital through reliable and most effective sources.
2)Market analysis to keep up with the rapidly changing trends by accumulating the same in practices.
3)Taking up advisory roles under merges, acquisitions and takeovers.
4)Decisions to diversify and expand as per the growth of company.
5)Capital budgeting to keep expenditures in check while allocating only the profitable project.