- corporate finance
Acquisition and allocation of a corporation's funds or resources, with the goal of maximizing shareholder wealth (i.e., stock value).Funds are acquired from both internal and external sources at the lowest possible cost and may be obtained through equity (e.g., sale of stock) or debt (e.g., bonds, bank loans). Resource allocation is the investment of funds; these investments fall into the categories of current assets (such as cash and inventory) and fixed assets (such as real estate and machinery). Corporate finance must balance the needs of employees, customers, and suppliers against the interests of the shareholders. See also business finance.
* * *▪ businessthe acquisition and allocation of a corporation's (corporation) funds, or resources, with the objective of maximizing shareholder wealth (i.e., stock value). In the financial management of a corporation, funds are generated from various sources (i.e., from equities and liabilities) and are allocated (invested) for desirable assets.The first function of corporate finance, resource acquisition, refers to the generation of funds from both internal and external sources at the lowest possible cost to the corporation. Two main categories of resources are equity (i.e., owners' equity) and liability. Examples of equity are proceeds from the sale of stock, returns from investments, and retained earnings. Liabilities include bank loans or other debt, accounts payable, product warranties, and other types of commitments from which an entity derives value.Resource allocation, the second function of corporate finance, is the investment of funds with the intent of increasing shareholder wealth over time. Two basic categories of investments are current assets and fixed assets. Current assets include cash, inventory, and accounts receivable. Examples of fixed assets are buildings, real estate, and machinery. In addition, the resource allocation function is concerned with intangible assets such as goodwill, patents, workers, and brand names.It is the job of a corporation's financial manager or managers to conduct both of the aforementioned functions in a manner that maximizes shareholder wealth, or stock price. Financial managers must balance the interests of owners, or shareholders; creditors, including banks and bondholders; and other parties, such as employees, suppliers, and customers. For example, a corporation may choose to invest its resources in risky ventures in an effort to offer its shareholders the potential for large profits. However, risky investments may reduce the perceived security of the company's bonds, thus decreasing their value in the bond market and increasing the rate of interest that the firm must pay to borrow money in the future. Conversely, if the corporation invests too conservatively, it could fail to maximize the value of its equity. If the firm performs better than other companies, its stock price will rise, in theory, enabling it to raise additional funds at a lower cost, among other benefits.Practical issues and factors influenced by corporate finance include employee salaries, marketing strategies, customer credit, and the purchase of new equipment. See also business finance.
* * *
Look at other dictionaries:
Corporate finance — Corporate finance … Wikipedia
Corporate Finance — Der Begriff Corporate Finance bezeichnet ein Spezialgebiet der Finanzwirtschaft, das sich mit Fragen zur optimalen Kapitalstruktur, zur Dividendenpolitik des Unternehmens sowie der Bewertung von Investitionsentscheidungen und der Ermittlung des… … Deutsch Wikipedia
Corporate finance — One of the three areas of the discipline of finance. It deals with the operation of the firm (both the investment decision and the financing decision) from that firm s point of view. The New York Times Financial Glossary * * * corporate finance… … Financial and business terms
corporate finance — One of the three areas of the discipline of finance. It deals with the operation of the firm (both the investment decision ( investment decisions) and the financing decision) from the firm s point of view. Bloomberg Financial Dictionary Any… … Financial and business terms
Corporate Finance — (angelsächsische) Bezeichnung für Unternehmensfinanzierung. Wegen der im Vergleich zur Bundesrepublik Deutschland bestehenden Dominanz von Körperschaften im angelsächsischen Raum liegt der Schwerpunkt der C.F. jedoch auf den Maßnahmen der ⇡… … Lexikon der Economics
corporate finance — noun the financial activities of corporation • Members of this Topic: ↑gross profit, ↑gross profit margin, ↑margin, ↑return on invested capital, ↑return on investment, ↑ROI • Hypernyms: ↑finance … Useful english dictionary
Corporate Finance — Any financial or monetary activity that deals with a company and its money. This can include anything from IPOs to acquisitions … Investment dictionary
corporate finance — 1) The branch of financial economics concerned with business funding, decision making, and mergers and acquisitions. 2) An activity in investment and merchant banks in which advice and funding for mergers and acquisitions, etc. , is provided to… … Big dictionary of business and management
corporate finance — /ˌkɔ:p(ə)rət faɪnæns/ noun the financial affairs of companies … Dictionary of banking and finance
Corporate Finance Law — Beschreibung Juristische Fachzeitschrift Verlag Fachverlag der Verlagsgruppe Handelsblatt Erstausgabe 2010 … Deutsch Wikipedia