Why is corporate finance important to all managers?
Corporate finance is a specific area of finance dealing with the financial decisions corporations make and the tools as well as analyses used to make these decisions. The primary goal of corporate finance is to enhance corporate value, without taking excessive financial risks.
A corporation’s management’s primary responsibility is to maximize the shareholder’s wealth which translates to stock price maximization.
Corporate finance provides the skills managers need in order to:
Identify and select the corporate strategies and individual projects that add value to their firm- Capital Budgeting
Forecast the funding requirements of their company, and devise strategies for acquiring those funds- Capital Structure
An appropriate capital structure is a critical decision for any business organization. The decision is important not only because of the need to maximize returns to various organizational constituencies, but also because of the impact such a decision has on an organization’s ability to deal with its competitive e…
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