Corporate Finance

Posted in Finance, Accounting and Economics Terms, Total Reads: 1608

Definition: Corporate Finance

The role of any corporation’s management is to increase the value of the firm to its shareholders.

Corporate finance deals with the strategic financial issues associated in achieving this goal. It can be divided into long term and short term decisions and techniques.

It includes any financial or monetary activity that deals with a company and its money such as:-

  • How a corporation should raise and manage its capital (FINANCING DECISIONS)
  • What investments a firm should make (INVESTING DECISIONS, ex: Project Valuation)
  • Whether it makes sense to acquire a firm, merge with another firm or divest an existing business
  • How much portion of the profits should be returned to the shareholders in the form of dividends and how much should be retained for re-investment (DIVIDEND DECISIONS)
  • Working capital management: i.e. managing cash, inventory, receivables, payables, cash etc. efficiently. (SHORT TERM DECISIONS)

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