Corporate finance is the research of the business’s funding-related decisions, which will best suit to a business’s decisions. Finance mangers has to figure it out its nature of corporate finance, characteristics of corporate finance and features of corporate finance to decide which is best suitable for their corporate organization. How is company reinvesting into the business, and exactly how far should this pay out towards shareholder’s holders. Your walk-through will likely discover each of these business choices inside greater level.
Nature of Corporate Finance:
Financing as well as investing choices are always termed as two sides of a same coin. That the firm must increase funds only when this has suitable ways in order to invest them. Features of corporate finance and characteristics of corporate finance offers different technology and also strategies what allow managers to evaluate financing and also investing choices. It’s therefore important for us to understand nature of corporate finance for well-being of a company. Here are some of the guidelines below discuss the characteristics, features and nature of corporate finance.
1. Financial Planning:
Corporate finance is a financial planning for a company. The characteristics of corporate finance includes preparation, raising funds, investing plus tracking each finance of organization. At short, it offers all financial aspects for the firm. This research, techniques and strategies are defined by each financial department lead through that finance supervisor.
2. Fund Raising:
An important features of corporate finance is to raise funds for the company. Finance can be accumulated through shares, bank loans, debentures, bonds, etc. Its most hard for newer service providers in order to collect finance as their investors do not have confident and vision towards new businesses. Nevertheless, it is quite easy for respected companies to gather finance considering goodwill, reputation in the market.
3. Goal Oriented:
One of the features of corporate finance is goal oriented. That means, it is important to regularly achieve each objectives associated with the company. The main goal of corporate finance are to maximize profits, giving good dividends to shareholders, as well as creating fund reserves for future expansion activities and so forth.
4. Investing Objective:
The nature of corporate finance notes for every company is to optimize investing needs for maximizing profits. Your finance can be used to quickly attain your investing objectives of the company. For example: it can be used to invest in machines or fixed assets. It’s can also be used for day to day company operations. That finance needs to be optimized for profitably.
5. Finance Options:
There are two main options in the nature of corporate finance, i.e. working capital and fixed capital. Working-capital normally called as short-term finance. It’s mainly used to meet the short-term financial requirements for your business. For example: It can be used to cover your day-to-day expenses or operational cost of a company. Fixed capital normally called as long-term finance. It is always used to fulfill your very long-term financial requirements for your business. For example: buying a new manufacturing unit or fixed assets.
6. Legal Requirements:
There are definitely various legal criteria to corporate finance. The company need to take the appropriate permission, from the finance regulatory board of the country for the rising finance from public. For example: In India SEBI (Securities and Exchange Board of India) and SEC (Securities Exchange Commission) in United States also offers to follow all of the guidelines to a company. This features of corporate finance need to be taken utmost care when raising funds.
7. Managing and Controlling:
Financial management is excellent art considering that it needs individual skills, techniques, strategies as well as judgement. Nature of corporate finance requires ideal way for planning as well as control. Creating is needed in order to collect finance from the investors. It’s also necessary for investing their finance. Control is needed to find whether the finance are optimized and invested appropriately. If the finance is not been utilized properly then corrective steps should be taken and may also need to restructure the way finance is been utilized.
8. Business Management:
Corporate finance is plays a crucial and important role in business management. Characteristics of corporate finance is that it is a blood or life-line of a business. A nature of corporate finance is needed towards many business tasks. For example: It’s necessary for performing that business smoothly, its required for promoting business, for expansion, modernization, diversification, replacing old assets with new assets and more. Finance is also required for paying interest, dividend, taxes as well as for managing risks.
9. Dynamic in Nature:
A dynamic in nature of corporate finance is a distinct feature of finance. That it goes on changing based on the change in planning, environment, circumstances, times, project delays etc. Your finance supervisor must suggestions new and innovative ideas to utilize savings, invested money and corporate finance. He must be a creativity when doing his task.
10. Connecting with Other Divisions:
A nature of corporate finance has a near relationship with different divisions within a company. For example: marketing and promotional department, manufacturing department, advertising division, accounting department, etc. That is mainly because all the divisions require finance to perform their operation constantly and smoothly.
Here we have discussed about features of corporate finance, nature of corporate finance along with characteristics of corporate finance. Hope this was useful for you. There are definitely adequate options and sources through which you can raise funds including personal savings, crowdfunding, borrowing from family or friends etc. Such thumb rule is also application for corporate firm as well.
- Tutorial Course - Corporate Finance Basics For Beginners -
» e-Learning Chapter 1: What is Corporate Finance with Examples
» e-Learning Chapter 2: Objectives of Corporate Finance
» e-Learning Chapter 3: Importance of Corporate Finance
» e-Learning Chapter 4: Types of Corporate Finance
» e-Learning Chapter 5: Principles of Corporate Finance
» e-Learning Chapter 6: Sources of Corporate Finance
» e-Learning Chapter 7: Functions of Corporate Finance
» Currently Reading: Nature of Corporate Finance
» e-Learning Chapter 9: Scope of Corporate Finance
» e-Learning Chapter 10: Corporate Finance Quiz - Question and Answers