CORPORATE FINANCE

Introduction :

Corporate Finance is a platform or an area which makes us to deal with the finance decision corporations make tools and it is the analysis to make decisions. The main aim of the corporate finance is increase the corporate value to manage financial risks. It deals with the strategic financial issues which are associated with its achievement.

Explaination :

Corporate finance can be divided into long term and short term decisions and techniques.capital investment decisions can hold long term choices about which makes us the project receive investment which includes equity or debt or whether they should pay dividends to share holders. on the other way short term decisions can come under working capital management which deals with the short term balance of current assests and current liabilities.

Finance and corporate financer can also associates
with the investment banking. The important role of investment banker is to evaluate company’s financial needs and can raise the particular type of the capital that best suits those needs.

Capital Investment Decisions :

These are long term Corporate finance decisions which are related to the fixed assests and capital structure. The decisions are based on several inter- related criteria. Corporate mangement seeks to increase the value of the firm by investing in projects which gives a positive net present value using an appropriate discount rate which can be financed appropriately.








The Investment Decision :

Management should allocate limited sources with in the competing opportunities usually named as projects and this process is said to be called as capital budgeting.Making of this capital allocation decision requires estimate or to make through what is the financial cost of the project which means the function of the size, timing and predictability of flowing of the future cash.

Project valuation :

In general the value of each project will be estimated using a discounted cash flow valuation which gives the highest value as measured by the net present value. The net present value is mainly affected by the discount rate and thus it includes the identifying the discount rates named as the project “hurdle rate” which makes critically to the right decision. The hurdle rate is the least acceptable return on an investment and it should reflect the risk of an investment, which are typically measured by the volatility of cash flows and must take into account of the financial mix.
In additional with net present value there are others ways to used
as a secondary selection criteria in corporate finance. This includes discount pay back period, capitial efficiency.

Working Capital Management :

The main decisions which are related to working capital and short term financing are said to be called as working capital management. It involves managing of the relation between a firm’s short-term assets and short-term liabilities.
The main goal of the corporate finance is to increase the firm value.
It is enhanced through appropriately selecting and funding net positive value positive investments. It is therefore to ensure that firm can be able to operate which has a sufficient cash flow to service long term debt.