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Corporate Finance Essay

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Below is an essay on "Corporate Finance" from Anti Essays, your source for research papers, essays, and term paper examples.

Corporate finance is the field of finance dealing with financial decisions that business enterprises make and the tools and analysis used to make these decisions. The primary goal of corporate finance is to maximize corporate value by minimizing corporate risks.
The fundamentals of corporate finance deal with two aspects of corporate finance:
 Short term decisions and methods
 Long term decisions and methods
Capital investment decisions are regarded as long term decisions that deal with which project to invest in, whether it is possible to fund the investment with debt or equity, as well as the time when dividend should be paid to the shareholders. The capital investment decisions are associated with capital structure and fixed assets in the long term. These decisions can be categorized into the following types:
1. Investment Decision. The procedure of allocation of resources carried out by the management is termed as capital budgeting.
2. Project valuation. It makes use of such as Discounted Cash Flow Method, Internal Rate of Return, Equivalent annuity and many others.
3. Valuation of flexibility deals with: Real Options Analysis and Decision Tree Analysis.
4. Financing Decision   involves Balance Sheet Analysis, Trade-Off Theory   etc.
5. Dividend Decision.   Basically, dividend is distributed in two forms: share buyback and cash dividends
Contrarily, the short-term decisions may be consolidated under Working Capital Management. This domain addresses the short-term equilibrium between current liabilities and current assets. Here the stress is on management of stocks and inventories, cash, as well as borrowing and loaning on the short-term basis, for example the terms and conditions on which loan is provided to the clients.
The process of Working Capital Management can be categorized into the following types:
 Debtors management
 Cash management
 Inventory management
 Short term financing
Financial Risk Management is vital for...

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"Corporate Finance". Anti Essays. 20 Mar. 2018


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Corporate Finance. Anti Essays. Retrieved March 20, 2018, from the World Wide Web: http://www.antiessays.com/free-essays/Corporate-Finance-76030.html