Introduction to corporate finance / Introduction to our blog
In this blog corporate finance outline, you can learn every aspect of corporate finance in a nutshell. As the easy corporate finance team, we would love to help the people who are interested in learning corporate finance around the world.
What is corporate finance / Corporate finance outline
Corporate finance is developed based on the financial management function of an organization. Therefore financial management is, managing the funds in an organization. In conclusion, An efficient financial management system should be able to achieve the objectives of an organization.
Financial management can further discuss under three broad aspects.
- Financing Decision
- Investment Decision
- Dividend Decision
1. Financing Decision
Above all, you have to obtain finance. In other words, Financing activities are most closely related to the capital structure of the company. Hence the most common methods of financing the company are equity financing & debt financing.
When obtaining finance, there is always a cost associate with that. Above all, interest & preference dividend can be identified as the cost of funding.
2. Investment Decision
Now you have funds in your hand. So as a financial analyst, you have to look for the best options available in the market for investments. For instance,company can look for buying public listed company shares with the addition funds available.
Financial management efficiency
This is the theory where financing decision & investment decision go hand in hand. As a financial analyst, you should be able to achieve profits on investments than the cost incurred for obtaining finance.
Under the investment decision, we will further discuss the following topics broadly,
- Investment appraisals
- Capital Budgeting
- Appraisal Techniques
- Valuations ( P/E, Free Cash Flow Methods, Asset Base Valuation )
3. Dividend Decision
Company will pay a dividend to the investor who has invested. In other words, payments to the funds obtained through the general public. Above all , company pays dividends from the net operating profit after tax (NOPAT). Similarly, it can elaborate as funds attributable to the shareholders.
In addition, we will discuss different types of dividend policies & valuation techniques broadly in the next articles.
