Tuesday, May 24, 2011

Corporate Finance

In order to get appropriate definition of corporate finance, Balanced Finance presents corporate finance definition based on www.en.wikipedia.org, corporate finance is a type of finance dealing with monetary decisions that business enterprises make the tools and analysis used to make these decisions.

The primary goal of corporate finance is to maximize corporate value while managing the firm's financial risk. Although it is in principle different from managerial finance which studies the financial decisions of all firms, rather than corporations alone, the main concepts in the study of corporate finance are applicable to the financial problems of all kinds of firm.

The discipline can be divided into long-term and short-term decisions and techniques. Capital investment decisions are long-term choices about which projects receive investment, whether to finance that investment with equity or debt, and when or whether to pay dividends to shareholders. On the other hand, short term decisions deal with the short-term balance of current assets and current liabilities; the focus here is on managing cash, inventories, and short-term borrowing and lending (such as the terms on credit extended to customers).

The terms corporate finance and corporate financier are also associated with investment banking. The typical role of an investment bank is to evaluate the company's financial needs and raise the appropriate type of capital that best fits those needs. Thus, the terms "corporate finance' and "corporate financier" may be associated with transactions in which capital is raised in order to create, develop, grow or acquire businesses.

And according to www.investorwords.com, corporate finance focuses on raising money for various projects or ventures, For investment banks and similar corporations, corporate finance focuses on the analysis of corporate acquisitions and other decisions.

Finally, we can say, corporate finance is financial or monetary activity that deals with a company and its money.

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