What is Corporate Finance?

Are you interested in the financial aspects of companies? In this article we will tell you what corporate finance consists of and what its objectives are. Also, we invite you to get to know the Specialization in corporate finance that at EIA University we have for you.

It is important for businesses to conduct proper stewardship of their financial resources, so corporate finance professionals are important. The purpose of these professionals is to make an organization's operations efficient and maximize its profits.

The management performed by these professionals includes aspects such as analysis, planning and control of investments and capital.

  1. What is Corporate Finance?
  2. Corporate finance classification
  3. Features of corporate finance
  4. What are the goals of corporate finance?
  5. Importance of corporate finance
  6. Profile of the student specializing in corporate finance

What is Corporate Finance?

Corporate finances are those related to monetary decisions, the analysis and study of corporate variables that allow to maximize shareholder value, i.e. corporate finance seeks to obtain economic resources for the company and allocate them in the best possible way. Its main objective is to reduce the potential risk of certain decisions and achieve optimal growth of the company, obtaining more and more value.

Being a professional specialized in corporate finance has an extremely important role within the organization, since its main function is to work to achieve the objectives that the company sets itself, through planning, the definition of the capital structure, the determination of the feasibility economy of a project, among other activities that this professional can carry out to achieve his goal.

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Corporate finance classification

Decision making is the basis of corporate finance, seeking the best performance of a company. This is why this branch can be classified into two large groups:

  • Long-term decision making: In this group, decision making is based on projects based on a capital investment. This can be done with own funds, debt or with dividend payments to shareholders.
  • Short-term decision making: In this group, decisions are made based on current assets and liabilities. In the case of company assets we speak of the remaining part of the capital or of the company, i.e. the operations that are carried out such as salaries or invoices.

Features of corporate finance

Corporate finance has its own characteristics that distinguish it from other branches of the finance area.

  • They appreciate both the time and money invested by a business.
  • They offer the company long-term investments that are to be made easily and similarly.
  • opportunity costs

What are the goals of corporate finance?

When discussing corporate finance, it is important to clarify that its main objective is to maximize the benefits for business participants, especially partners or shareholders. Another focus is the development of investment projects. It should be noted that any company or legal entity implies a certain complexity due to its specific characteristics. In general, we can define that the objectives of corporate finance are:

  • Determine the investment in the assets of an entity.
  • Define Liability Financing or Equity Financing.
  • Check the profitability, productivity, leverage and liquidity levels of the business.
  • Manage and control financial risk.
  • Maximize the economic value of the entity.
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Importance of corporate finance

It must be very clear that the main objective is to maximize the benefits for the shareholders or owners of the company, to add value to the investment projects that the company undertakes and to obtain the maximum profitability possible. The mission is to make profitability the norm.

Its importance lies in the management of the company's tangible and intangible assets. Its value is the right to the assets and money created by the organization.

Profile of the student specializing in corporate finance

This specialization is aimed at professionals in administration, economics, engineering and related areas who seek a solid and advanced financial education; who hope to fill management positions in the area.

The Corporate Finance Graduate Program is for professionals who work as analysts, leaders, directors, or managers in real or finance industry organizations, or professionals who wish to project themselves into this type of position. Graduates from all areas of knowledge can apply, who need to qualify, deepen and specialize their financial skills for reasons of professional practice.

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