corporate finance

Examples of corporate finance in the following topics:

• Functions of Corporate Finance

  • Corporate finance utilizes tools and analysis to make sound financial business decisions.
  • Corporate finance deals with monetary decisions that business enterprises make and the tools and analysis utilized to make the decisions.
  • Corporate finance is concerned primarily with making investment and financing decisions; that is, making sure that money is being used in the best way.
  • The corporate finance department of a company is in charge of budgeting.
  • The corporate finance department must also determine how to finance projects.

• The Importance of Finance

  • Corporate finance is the area of finance dealing with monetary decisions that business enterprises make and the tools and analysis used to make those decisions.
  • The primary goal of corporate finance is to maximize shareholder value.
  • 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 financial problems of all kinds of firms.
  • The terms corporate finance and corporate financier are also associated with investment banking.
  • 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.

• Role of Finance in an Organization

  • The primary role of corporate finance is to determine how best to maximize shareholder value.
  • Corporate finance is the area of finance dealing with monetary decisions that business enterprises make.
  • When finance is talked about in the context of business decisions, it is called corporate finance (technically, corporate finance deals only with corporations, while managerial finance deals with all types of companies, but we will use the terms interchangeably).
  • There are other branches of finance such as personal finance (individuals taking care of their money) and public finance (the finances of the government).
  • The primary goal of corporate finance is to maximize shareholder value.

• Mergers and Acquisitions (M&As)

  • M&A refers to the aspect of corporate strategy, corporate finance, and management dealing with the buying and selling of companies.
  • The combined company changed its name to Exxon Mobil Corporation
  • Mergers and Acquisitions (M&A) refers to the aspect of corporate strategy, corporate finance, and management dealing with the buying and selling of different companies and similar entities that can help an enterprise grow rapidly.
  • Mergers and Acquisitions (M&A) refers to the aspect of corporate strategy, corporate finance, and management dealing with the buying and selling of different companies and similar entities that can help an enterprise grow rapidly.

• Long-Term vs. Short-Term Financing

  • Long-term financing is generally for assets and projects and short term financing is typically for continuing operations.
  • Achieving the goals of corporate finance requires appropriate financing of any corporate investment.
  • A corporate bond is a bond issued by a corporation to raise money effectively so as to expand its business.
  • Short-term financing can be used over a period of up to a year to help corporations increase inventory orders, payrolls and daily supplies.
  • It is issued by large corporations to get financing to meet short-term debt obligations.

• Reasons to Study Finance

  • Finance is relevant to all business functions, the macroeconomy, and personal finances.
  • Finance plays an involved role in the health of the overall economy, which impacts everyone, regardless of whether or not they have studied finance.
  • Like corporations, individuals are faced with investment and financing decisions.
  • Individuals cannot sell equity like corporations, but they can choose to either dip into their savings or take out loans.
  • Of course, finance is an important field of study for those who have a desire of working in finance or accounting.

• Pros and Cons of a Corporation

  • The corporation is one type of business structure.
  • This limited liability also makes financing more attractive from a risk perspective.
  • Similarly, the corporation does not cease to exist with the death of shareholders, directors, or officers of the corporation.
  • Another benefit of the corporate structure is that, in the United States, corporations are generally taxed at a lower rate than are individuals.
  • S corporations are merely corporations that elect to pass corporate income, losses, deductions, and credit through to their shareholders for federal tax purposes.

• Structure of Corporations

  • The Finance department is also vitally important, as it is responsible for acquiring capital used in running an organization.
  • Another way a corporate structure can be defined is by business divisions.
  • Hewlett Packard (HP) is a good example of a corporate structure including multiple divisions.
  • Google Video is a division of Google, and is part of the same corporate entity.
  • Hewlett Packard is an example of a corporation with multiple divisions and subsidiaries.

• Corporate Taxes

  • Corporate taxes are especially complicated because of the inherent complexities of corporations themselves.
  • Corporate taxation differs depending upon the legal form of the corporation.
  • A C corporation refers to any corporation that is taxed separately from its owners.
  • Owners of C corporations are personally protected from any liability of the company - an idea known as the corporate veil.
  • Shareholders generally cannot include corporations or partnerships (certain trusts, estates and tax-exempt corporations are permitted).

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