Corporate Finance: Keys to Business Success
In a context where companies are faced with radical market changes, rapid digital transformation, geopolitical upheavals and new environmental challenges, sound financial management is essential to their success. In this context, the set of strategic financial activities aimed at the success and sustainability of the activity is generally defined by the term corporate finance.
What is corporate finance?
Corporate finance is a branch of finance that deals specifically with the economic management of companies , with the purpose of ensuring that they have sufficient resources to operate effectively and sustainably in both the short and long term. The main activities that make up corporate finance are:
Fundraising : aims to obtain resources for the company and includes, for example, activities to identify and take advantage of the best financing opportunities, negotiating bank loans and finding new investors ;
Investment appraisal : involves the analysis and evaluation of the financial, economic and strategic aspects of an investment, for example, through the estimation of expected cash flows, the application of evaluation methods (such as net present value and internal rate of return) and risk analysis considering different scenarios;
Financial planning is the activity aimed at ensuring that the sweden whatsapp data company has sufficient liquidity to cover expenses, finance investments and achieve its objectives. It includes, for example, cash flow management and the allocation of financial resources to the company's various activities;
Human capital management : concerns the management of all human resources in the company. It focuses on well-being and sustainability, two elements that are at the heart of business decision-making processes;
Financial risk management : aims to develop strategies to protect the company from losses and mitigate negative impacts;
Financial analysis and reporting : aims to provide information to support financial planning, evaluation and decisions. This is done, for example, through balance sheets, income statements, cash flows, ratio calculations (debt, liquidity, profitability, etc.) and other financial reports.
Characteristics of corporate finance
The fundamental principles and characteristics of corporate finance can be summarized as follows:
Value : The objective should be to maximize the company's net value;
Return/risk : financial investments must be evaluated based on the relationship between expected return and associated risk;
Diversification : It is essential to diversify financial risk by investing in different activities or sectors;
Cost of financial resources : the company's financial resources must be acquired at the most convenient cost possible
Time value of money : The value of money today is greater than in the future, due to the potential returns that can be earned by investing;
Liquidity : Managing the company's cash flow is extremely important, especially to prevent possible moments of low liquidity;
Financial balance : It is essential to ensure that liabilities are adequately supported by assets and that equity is sufficient to cover financial obligations.