While almost everyone has come across the term of corporate finance, there is still quite a lot of ambiguity surrounding the term, especially for all the finance enthusiasts out there. This field basically relates to the study of all the financial decisions of any business. One very important thing to note here, is that a firm or an organization doesn’t necessary have to be a corporation, in order to deal in corporate finance. The primary goal here is basically looking for various ways and means, to be taken in order to reach the optimum level of a company’s value, by taking various decisions in terms of the investment, financing and the dividends expected by the company.
To put it simply, the professionals working in this field, have to basically answer a few questions. For example, how to allocate scarce resources in order to minimize and maximize revenues, the process of acquiring these very resources, what use should the profits be put to, the amount that needs to be re-invested within the company and the amount that needs to be payed out to the various business owners. This is in a nutshell, is the walk-thorough that every Corporate Banker is required to take, while dealing with various firms and organizations.
Almost every organization has a department of corporate finance, which basically deals with all the capital investment decisions. It is this department, that decides the way in which a company is supposed to pay for any proposed investment, either with equity or with debt. This department is involved in the decision of making payments to all of the shareholders of the company as well. Short term financial issues like management of current assets and liabilities, control of the inventory investments and long term financial issues involving the new capital purchases and investments are all dealt with, by this department.
Capital Investment is one of the major tasks that is carried out by the department of corporate finance. The process is mainly concerned with capital budgeting, which is the key to a corporate finance procedure. The reason why this is considered to be a very important task, is because poor capital budgeting, which leads to under-investing or over-investing can lead to a weak financial condition of a company. Other various functions of this department and the Corporate Bankers, usually include Capital Financing as well. This is basically an umbrella term used for the process of sourcing of capital. As a part of this process, a firm can borrow from various financial intermediaries like commercial banks, or can also issue debt securities, through a number of investment banks. As the field of corporate finance is at the heart of the banking sector, this is why it is sought after by a number of finance aspirants. While it a well known fact, that just belonging to a background in finance does not cut it, specialization courses have become quite the norm these days. Institutes like Imarticus Learning are becoming the most sought after training institutes, as a result of their industry endorsed offerings in a number of finance related courses, including corporate finance.