Corporate financing deals with financial decision-making in corporations. A bit different from business financing, corporate finance aims to maximize shareholder profits. Corporate finance assignment help would-be finance managers hone their skills to the max. And this article can help students ace their finance homework with ease.
Let’s begin.
Critical responsibilities of corporate finance managers
In any corporation, any finance manager's primary functions are determining the best avenues of taking acute investment and financing decisions.
Your corporate finance assignments will help you take such virtual decisions by carefully evaluating a given scenario. As corporate finance managers, you would need to guide the brass regarding the assets to invest in and the methods of financing such investments. Through these ways, a financial manager improves a company’s shareholder values.
Three fundamental principles and firm value maximization
Every business decision has financial implications and the ones that involve money fall under the rubric of corporate finance. At the heart of corporate finance lies the objective of improving a firm's value.
For any firm, investments are critical financial decisions that a firm calls its assets. Firms can organize financing of the new investments via debts and equity. Naturally, every corporate and business finance balance sheet will list two significant forms of assets, namely, Assets in Place and Growth Assets and two key liabilities, Debt and Liabilities.
Three fundamental principles give direction to all corporate financial decision making. They are:
- Investment Principle=a finance manager guides the brass to invest in assets and projects that yield a return more significant than the minimum acceptable hurdle rate. Hurdle rates should be higher for riskier projects, and the returns are monitored in terms of cash flows and their timing.
- Financing Principle= investment decisions operate on a financing mix which maximizes the value of the investments made and enables the company to match the investment financing with the returns.
- Dividend Principle= If there are not many investments that earn the hurdle rate, finance managers may decide to return cash to the owners. The form of return depends upon the preference of the stockholders.
The Ultimate Objective Of Corporate Finance
When devising any investment and financial decision, corporate finance managers focus on one particular objective, maximizing the business's value. The three Principle above form the basis of the numerous models and theories in modern corporate finance. You will come across these models in your corporate finance homework and will be able to determine the influence of the above three principles in every aspect of those modern models.
And, that wraps up this particular write-up. Here’s hoping it enlightened you about the core ideas of corporate finance. Use this article as a guide while doing your revisions and look for expert corporate finance assignment writing help from online academic services of renown.
