Finance is a concept that refers to all the money managing process. For the common citizen, understanding finances means knowing how to manage the personal income in order to improve his lifestyle. The same thing is true for corporations. However when we are talking about managing the money of a corporation, we have to understand that the processes are a lot more complex. Understanding corporate finance can help us make better investments and it can also help us manage our money in a more productive way. In order to be able to grasp all the aspects of this type of finance we must analyze a couple of its aspects.
- Definition
Corporate finance is a field that deals with the capital structure of a corporation. The processes that take place usually reflect the managers’ actions which are aimed at increasing the value of the company but also the instruments, statistics and analysis that are used in order to allocate money. While corporations have to build their finance rules by taking into account a large amount of money, the same rules can be applied to smaller businesses. The main purpose of this type of finance is to increase the shareholder value, so whether you own a scrap metal yard or any other type of company, you will need professional financial management. This will help you not only have a better overview of your business, but also calculate risks, be aware of the cash flow and increase your incomes. All these operations may be difficult to understand for those who lack professional knowledge, which is why any company should have its own financial consultant or department.
- Types of transactions
The types of transactions that are being made in the field of corporate finance usually involve all the processes that have to do with increasing the corporations value to the shareholders. These usually include: raising capital (seed, start-up, developmental or expansion), mergers and mergers of private or public companies, buy-ins and buy-outs or companies, divisions and subsidiaries, raising money through equity, debt and related securities, raising capital for specialist investment funds, financing joint venture, projects, infrastructure, partnerships and privatizations, raising and restructuring debt and so on.
- Division of corporate finance
This division is an authority which has the mission of protecting investors by maintaining fair and efficient markets and by facilitating capital information. In order for a country to have economic growth it is important for it to have a well structured and transparent economic environment in which investors can feel safe to trade capital. In order to achieve its purpose, the division tries to make sure that investors have accurate capital information when a company offers its securities to the public. It also offers interpretive assistance regarding SEC rules and forms.
- Professional roles
In order for corporate finance to work smoothly it is important to assign responsibilities to qualified people. On that matter there are many professional roles in the field of finance such as: corporate finance advisers, reporting accountants, lawyers, private equity providers, bankers and other debt providers, brokers, directors and executives and so on. It is important that all these people know their individual responsibilities but they must also have a good communication system in order for their decisions to be aimed towards the common purpose of increasing the corporation’s value.
