What I have Learnt about corporate finance .
what is corporate finance?
Corporate finance is the division of finance that deals with how corporations deal with funding sources capital structuring and investment decisions. Corporate finance is primarily concerned with maximizing shareholder value through long and short term financial planning and the implementation of various strategies. Corporate finance activities range from capital investment decisions to investment banking understanding ,corporate finance departments are charged with governing and overseeing their firms financial activities and capital investment decisions such decisions include whether to pursue a proposed investment and whether to pay for the investment with equity debt or both the purpose of corporate finance. The ultimate purpose of corporate finance is to maximize the value of a business through planning and implementation of resources while balancing risk and profitability the three important activities that govern corporate finance one investments and capital budgeting investing and capital budgeting includes planning where to place the companies long term capital assets in order to generate the highest risk adjusted returns this mainly consists of deciding whether or not to pursue an investment opportunity and is accomplished through extensive financial analysis by using financial accounting tools a company identifies capital expenditures estimates cash flows from proposed capital projects compares planned investments with projected income and decides which projects to include in the capital budget financial modelling is used to estimate the economic impact of an investment opportunity and compare alternative projects an analyst will often use the internal rate of return. In conjunction with net present value NPV to compare projects and pick the optimal 1 two capital financing this core activity includes decisions on how to optimally finance the capital investments discussed above through the business equity debt or a mix of both long term funding for major capital expenditures or investments may be obtained from selling company stocks or issuing debt securities in the market through investment banks balancing the two sources of funding equity and debt should be closely managed because having too much debt may increase the risk of default in repayment while depending too heavily on equity may dilute earnings and value for original investors 3 dividends and return of capital this activity requires corporate managers to decide whether to retain a business’s excess earnings for future investments and operational requirements or to distribute the earnings to shareholders in the form of dividends or share buybacks what are the career paths in corporate finance investment banking equity research commercial banking transaction advisor valuations corporate development investor relations treasuring private equity portfolio management. So we are learning how to Draw the ledger and balance sheet from the source documents.