Home >>

A short note on Corporate Finance
Published By FAREED SIDDIQUI on 2012-01-24 282 Views

Corporate Finance is defined as being concerned with the activities that are connected with or participating in management of cash flows in a Business Organization. Based on its theory and practice, it focuses on the best use of capital, while emphasizing on making wise financial decisions which could possibly be producing intended results for the accomplishment of the objective of shareholders, managers and stakeholders.

One of the most important principles of Corporate Finance is laying emphasis on the value of money over time. The standpoint allows situations to consider what could be preferable choice of a person if he is to receive certain amount of money either now or the time yet to come. The latter being eliminated, former would obviously be his choice. The proverb, “A Bird in the hand is worth two in the bush” is befitting at this point, as the cash today is to be valued more financially than it is in the future. Thus, the principle of value of money over time helps managers to take right decisions between cash inflows and outflows allowing them to consider the situations, spending money and earning the return in lieu of it.

Risk factor being associated with uncertainty plays a crucial role in corporate finance. It’s owing to the uncertainty of generating cash in the future, being a decline in the value of money in course of time, investors would have a preferable choice to accept the cash now rather than in the future. The situation may be varied if they are induced with proper compensation for the risk they are willing to sustain with. This gives rise to efficient management of Risk - being regarded as significant function of Corporate Finance.

Corporate Finance is of an abiding importance due to the attributes of its theory and practice. It seeks to maximize the wealth of shareholders while exhausting the possibilities of increasing overall value of a business enterprise. It’s aimed at yielding benefits with efficient allocation of capital by capital budgeting decision making process while evaluating expected return and the risk being concomitant with. It works in the most constructive terms accomplishing the goals of a business house in an unflawed and absolute manner.

Written By:
K.A.Fareed (Fareed Siddiqui)
BBA; MBA-Finance; M.Phil-Financial Management
MA-English; M.Phil-English
Pursuing CMA- USA
MIMC- Individual Member of Institute of Management Consultants of India

You may wish to read this article: http://expertscolumn.com/content/brief-discussion-financial-analysis-and-interpretation http://expertscolumn.com/content/what-managerial-economics-how-it-important-business-managers http://expertscolumn.com/content/psychology-%E2%80%93-nature-and-scope
Post Comment Comments (0) Report This

More Articles Specially Recommended for You:

Organizational Development and Human Resource Management

No Longer will prosper a business whose human element is ignored. The same message may be derived from the words of Sam Walton, the founder of Wal-Mar

Motivation : A key to organizational evolution

The urge, more often than not, found within a person stimulating him or her to action; having been derived from the word “ MOTIVE ”; being defined as

Management Accounting: A Powerful Tool for Management

The significance and the objective of management accounting may be understood if one goes beyond the definition that, “Accounting is recording of tran

Manager – The Most Expert of Human Resources

Walk into an organization, take a look. You are in the working atmosphere where you will see the employees sitting in the chairs by their desks with c

Business English for Professional Success

Business English, in a loose sense, signifies the use of the English Language for business and international trades. It’s a part of English Language w

Muscle Cars Still Reign Supreme

During the 1950’s and 1960’s the big motor companies were in the middle of a car revolution. The nation was turned upside down with people buying musc

Written By :nikmahajan
Lost Planet 2 Playstation 3 (PS3) Version Confirmed

After lots of speculations, Lost Planet 2 Playstation 3 version is finally confirmed. There is no reason left now to deny Lost Planet 2 for PS3 as

Written By :nikmahajan
Lays Chips HARAAM: Propaganda or Truth?

Some days back I received on SMS and an Email saying that, Lays Chips (Masala Flavor) is HARAAM. On the back of the Lays chips “E631 Fat”

Written By :ubpl
VolksWagen Polo - The Same But Different

Despite the facts that the new VolksWagen Polo resembles the old one and that it is also similar to the VW Golf MkVI it is indeed an all new vehicle.

Written By :nikmahajan


LogIn or SignUp! now to post your comments on this article.