The courage of business is to increase money from shareholders to fund projects that will return more currency to the investors. To do this, there are three financial difficulties the company must answer: how much funds should they raise, how best to increase the funds and then how to return the earnings to the investors. The financing options available to a company can differ depending on the size of the company. A small business is going to have fewer choices about how to raise funds. In brief it is corporate finance which is dealing with the above thinking.
Now it is time to figure out how to define or explain the term “Corporate Finance or Corporate Financing”. Some people think it is nothing but the financial activities that is interconnected to running a corporation. It is a division or unit that supervises the fiscal behavior of a company. Corporate finance is mainly deal with maximizing shareholder importance through long-term and short-term financial preparation and the realization of diverse strategies. All from capital investment judgment to investment banking falls under the area of corporate finance. A key major task of this department in any organization is to ensure the corporate governance. It is related with financing of joint stock companies.
The followings are incorporated in corporate finance:
Planning for funding: The fund executive plans the funding of the company. He takes assessment on issue like:-
How greatly funding is required by the company?
What are the foundations of funding?
How to utilize the funding gainfully?
Fund Raising: The investment manager elevates (collects) money for the company. Money can be collected from numerous sources, i.e., shares, debentures, banks, fiscal institutions, creditors, etc.
Investing the money: The investment manager utilizes the investment to realize the objectives of the company. There are two categories of corporate finance i.e. fixed capital and working capital. Fixed capital is exercised to procure fixed assets like land, buildings, machinery, etc. Whereas working capital is used to purchase unprocessed materials. It is also used to compensate the day-to-day expenses like salaries, rent, taxes, electricity bills, etc.
Monitoring the funding: The investment manager monitors (i.e. organize and supervise) the finance of the company. He has to reduce the cost of finance. He has to minimize the depletion and waste of finance. He has to minimize the menace of investment of finance. He also has to get highest return on the finance. Monitoring the finance is a skill and knowledge. It is a very multifaceted job. There are new apparatus & techniques for monitoring funds.