Importance Of Corporate Finance

864 Words2 Pages
bulb-icon

Recommended: Role of financial ratios

Corporate finance is essentially concerned with the process of maximizing shareholder value by implementing various strategies through long term and short term financial planning. It mainly consists of capital investment decisions to investment banking decisions. The principles of finance involves issues such as determining how to value a stock, cost of capital, and time value of money. These are just the few important issues that investment bankers deal with every day. In order to get in the field of corporate finance, it also requires a rigorous work ethic and education to get there. Through this essay I will explain the importance of corporate finance in the business world, the principles and concepts behind it, the education needed to get …show more content…

Like I said before, the concept of corporate finance is to make smart investment decisions by implementing various strategies through long term and short term planning. Some very important concepts of corporate finance are real options analysis, cost benefit analysis, financial analysis, and financial ratio. These are used widely by bankers, investors, analysts of the many different fields of finance. Real options analysis helps by evaluating the call and put options which are helpful in making long term capital investment decisions. Cost benefit analysis helps determine the total input in a project and receive results from that project which leads to identifying the options where the investments can be made. A group of financial analysts begins the financial analysis which is used to decide where a business is profitable or stable. One of the most well-known concepts is financial ratio. It is used to compare two similar companies by checking their financial statements, return on income, and return on …show more content…

A corporate finance job carries a lot of responsibilities. It is important to be precise and efficient when analyzing vast amounts of data because one single error can cost a business or company a fortune. There are three different types of paths a person interested in corporate finance can take. The first path is an entry level position which takes on the role of a financial analyst or business analyst. It requires a Bachelor’s degree in finance or economics. It also requires great communication and analytical skills. The second path is a mid-level position which takes on the role of a strategic planner or senior financial analyst. This requires an MBA with a focus in either finance or economics. You must also be able to demonstrate high quality performance and attention to detail and it has the same entry- level requirements. The last path is a senior level position which takes on the role of treasurer or chief financial officer (CFO). These are usually the people who are the top one percent of the field of finance. They must have an excellent track record and leadership in the field. They must know the ins and outs of the industry and have solid management skills. Therefore, to succeed in the corporate finance world, you need make wise business decisions, strong attention to detail, and be as precise and efficient as

Show More
Related

  • Summary Of Ethos Pathos Logos

    978 Words  | 2 Pages

    The research article, “How to Land a Finance Job With a Bachelor's Degree,” was published in the Investopedia in 2017. The author

    Read More

  • Debt vs Equity When Starting a Business

    674 Words  | 2 Pages

    Thesis: Businesses deem financing necessary when they are just beginning, expanding, or recovering; Debt financing and equity financing have many advantages and disadvantages but also change the entire accounting method that is to be considered while running the business. Debt financing has both advantages and disadvantages. Debt financing is a business’ way to start up, expand, or recover by borrowing money from a person or company. The money borrowed has to be paid back along with the interest that was accrued during the length of time the loan was carried out. This option is great for company’s that do not want investors.

    Read More

  • Amcor's Strategy, Governance, Performance, And Governance

    870 Words  | 2 Pages

    It outlines the interconnection of a company’s financial and non-financial elements and aims to combine them and show value creation and maintenance. It identifies resources and their effective and responsible usage. It intends to create a dialogue between the shareholders and other stakeholders and provides them with detailed information.

    Read More

  • Home Depot & Capital Structure

    987 Words  | 2 Pages

    Berk, J., & DeMarzo, P. (2011). Corporate finance: The core, second edition. (2nd ed.). Boston, MA: Prentice Hall.

    Read More

  • The Purpose of Financial Statements

    1286 Words  | 3 Pages

    Ÿ Capital structure/investment - This information is taking from the Balance sheet, but also from the Profit and Loss Account. This is examining the sources of finance the company has used and also looking at it as a potential investment opportunity. There are certain features, which must be present if financial information is to meet the needs of the user. The two most important features are that: Ÿ The information should be relevant to those who are using it.

    Read More

  • Finance Personal Statement

    548 Words  | 2 Pages

    Finance is a field that had always fascinated me right from my undergraduate college days. What make me interested in this particular field of study are the art of finance and the complexity of investment market which would allow me to employ my personal skills, such as analytical and communication skills, along with my personal characteristics such as dedication and compassion for what I do. As one of the most important sector in the world, I believe it would provide me with a broad range of career options.

    Read More

  • My Career In Finance

    734 Words  | 2 Pages

    Becoming a financial analyst will allow me to enjoy a career in the finance field that pays well and also offers ample opportunities. The position of a financial analyst is growing very fast and so there are more opportunities for me to become a financial analyst. Being a financial analyst will not only put me in a powerful position within the organization but it will also teach me skills that I need about investing for my own financial life. Some of the qualifications for the career that I already have include a bachelor’s degree in finance, technology experience (Microsoft word, Microsoft outlook), skills such as maximization of work practices, and quality vigilance. One qualification that I need for this position is the ability to turn data into information. Since this position requires past experience and I have none, I can undergo training so that I can be at par with the job functions and requirements. Despite the fast growth of the job, though, there is stiff competition and even though I will most likely get this job with my bachelor’s degree, a master’s degree will help me stand out among my competitors and it will also be a wise investment for me since I have my eyes on a financial management position at one point in

    Read More

  • Advantages And Disadvantages Of Capital Structure

    1186 Words  | 3 Pages

    The capital structure of a firm is the way in which it decides to finance its operations from various funds, comprising debt, such as bonds and outstanding loans, and equity, including stock and retained earnings. In the long term, firms seek to find the optimal debt-equity ratio. This essay will explore the advantages and disadvantages of different capital structure mixes, and consider whether this has any relevance to firm value in theory and in reality.

    Read More

  • Financial Ratio Analysis Report Of Ford Motor Company

    1668 Words  | 4 Pages

    Any successful business owner or investor is constantly evaluating the performance of the companies they are involved with, comparing historical figures with its industry competitors, and even with successful businesses from other industries. To complete a thorough examination of any company's effectiveness, however, more needs to be looked at than the easily attainable numbers like sales, profits, and total assets. Luckily, there are many well-tested ratios out there that make the task a bit less daunting. Financial ratio analysis helps identify and quantify a company's strengths and weaknesses, evaluate its financial position, and shows potential risks. As with any other form of analysis, financial ratios aren't definitive and their results shouldn't be viewed as the only possibilities. However, when used in conjuncture with various other business evaluation processes, financial ratios are invaluable. By examining Ford Motor Company's financial ratios, along with a few other company factors, this report will give a clear picture of how the company is doing now and should do in the future.

    Read More

  • Cash Management

    1080 Words  | 3 Pages

    Block, S. B., & Hirt, G. A. (2005). Foundations of financial management. (11th ed.). New York: McGraw-Hill.

    Read More

  • Essay On Financial Analysis

    933 Words  | 2 Pages

    Financial analysis is a process of studying the financial condition and main results of a company's financial activity in order to identify reserves to increase its market value and ensure further effective development. Also Financial analysis is used to understand the financial aspects of an investment and solutions.

    Read More

  • Personal Statement Of Financial Analyst

    799 Words  | 2 Pages

    They have to be punctual and have the ability to put in long hours every once in a while. Based on the information that I have researched, I can say that being a financial analyst wouldn’t be a bad fit for me. I have always had a knack for problem solving, especially during mathematical situations. I do slightly lean towards being a team member compared with being independent, and it could pose a bit of a problem if I do undergo this career. Like most people in business, financial analysts do spend some time traveling, and I definitely wouldn’t mind doing so. Financial analysts aren’t the only ones involved in financial and investment services; stockbrokers are also involved and are responsible for selling stock and other securities to others and conducting trades . The career is similar, but workers there put more focus on the stock market because they have to interpret it well in order to conduct trade deals. I do have some interest in following the stock market, so this career option wouldn’t be so bad for me. Being a budget analyst is another option related to finance. People in this profession are responsible for organizing budget reports for companies . One concern for the profession, however, is the national growth rate for the next decade. It is at 3%, slower than the average occupational growth rate of 7%, and much slower than 12% growth rate for financial analysts. Financial analysts could eventually be promoted to financial managers and have even more responsibility for managing a company’s finances. As of 2015, the median salary for this profession is $117,900

    Read More

  • Essay For Accounting And Finance

    548 Words  | 2 Pages

    My interest in Accounting and Finance stems from wanting to understand how governments and businesses make their vital decisions to be profitable. Studying this degree, will allow me to gain an understanding of financial accounting, management accounting and taxation providing me with skills to analyse data and develop my decision making. Additionally being able to incorporate different aspects of business alongside the core modules; will give me more knowledge of the world of accounting and finance.

    Read More

  • Financial Theories And Strategies

    1533 Words  | 4 Pages

    Financial theories are the building blocks of today's corporate world. "The basic building blocks of finance theory lay the foundation for many modern tools used in areas such asset pricing and investment. Many of these theoretical concepts such as general equilibrium analysis, information economics and theory of contracts are firmly rooted in classical Microeconomics" (Oaktree, 2005)

    Read More

  • Banking and Finance

    1013 Words  | 3 Pages

    Never have I ever climbed a mountain peak. As a child, I imagined myself conducting expeditions in deep-frozen pathways, leading amateur explorers to the top of the world, and instructing rookies in surviving harsh blizzards. Even though slightly altered, my childhood dream has been achieved. I led a team of fellow classmates, in my Strategic Management course, to the success summit of a financial competition. Over the course of a semester, I and my teammates were supposed to create and manage a company of the IT industry, in a computer-simulated environment, along with other four rival teams. I dealt with strategy and financial matters of our virtual enterprise, while my colleagues were working on marketing and manufacturing. During the four months of the exercise, I have experienced finance from various aspects: capital budgeting, through selecting favorable investment for upcoming quarters; debt management, by assessing the necessary amount and efficiency of loans; profitability analysis and dividend policy, which had been used to compile the company’s general performance index. Working in a multinational team, which included an American, a Norwegian and a Moldovan, strengthen my negotiations skills, as well as flexibility and cooperation. But above all, this experience intensified my passion for finance. Of course, a pleasant bonus was the fact that, in the end, our company’s financial performance was six times the performance of second-best team.

    Read More

More about Importance Of Corporate Finance

Open Document