Corporate Finance
                     CORPORATE FINANCE
Introduction
Corporate finance involves financial decisions 
that an organisation makes in its daily business 
operations. It aims to utilise the capital, which 
the organisation has, to make more money 
while simultaneously reducing the risks of 
certain decisions.
Source: cleartax.in
Purpose of corporate finance 
The ultimate purpose of corporate finance is to 
maximize the value of a business through 
planning and implementation of resources, 
while balancing risk and profitability.
Source: corporatefinanceinstitute.com
ACTIVITIES THAT GOVERN 
CORPORATE FINANCE
Investments & Capital Budgeting
• Investing and capital budgeting includes 
planning where to place the company’s long-
term capital assets in order to generate the 
highest risk-adjusted returns. 
• This mainly consists of deciding whether or not 
to pursue an investment opportunity, and is 
accomplished through extensive financial 
analysis.
Source: corporatefinanceinstitute.com
Capital Financing
• This core activity includes decisions on how to 
optimally finance the capital investments 
through the business’ equity, debt, or a mix of 
both. 
• Long-term funding for major capital 
expenditures or investments may be obtained 
from selling company stocks or issuing debt 
securities in the market through investment 
banks.
Source: corporatefinanceinstitute.com
Dividends and Return of Capital
• This activity requires corporate managers to 
decide whether to retain a business’s excess 
earnings for future investments and operational 
requirements or to distribute the earnings to 
shareholders in the form of dividends or share 
buybacks.
Source: corporatefinanceinstitute.com
Importance of corporate finance
• Large companies need data insights that can 
support them to make decisions like
• Shareholder’s dividends issue
• Proposals of investment options
• Managing of liabilities, assets and capital 
investments
Source: www.financialdirector.co.uk
Planning finances
• Here is where the comprehensions are made 
use of to determine the finances of the 
company effectively. 
• Decisions need to be taken on how much 
finance is needed, how it will be sourced, where 
it will be invested, would the investment bring 
in profits, how much is anticipated profits and 
such to decide on a firm plan-of-action.
Source: www.financialdirector.co.uk
Importantance of Company’s Capital 
Structure in Corporate Finance
• A company’s capital structure is crucial to 
maximizing the value of the business. Its 
structure can be a combination of long-term and 
short-term debt and/or common and preferred 
equity. 
• The ratio between a firm’s liability and its equity 
is often the basis for determining how well 
balanced or risky the company’s capital 
financing is.
Source: corporatefinanceinstitute.com
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