Fundamentals of Corporate Finance

How are investment decisions made, what is the role of corporate governance in creating the value of the company, how is the capital structure of the corporation determined? Let’s make a brief overview and dive into the world of Corporate Finance.

What corporate finance actually means?

According to the well-known Fundamentals of Corporate Finance textbook, it’s a system of economic relationships between participants in production and economic activities. This includes the collection, distribution and expenditure of financial resources that participate in the production and sale of finished products or services. Corporate finance is one of the main sources of revenue in the revenue part of the state budget, and also forms GNP (gross national product).

Corporate finance is a broad term that is used to generally define various financial transactions performed by a corporation. Corporate finance is one of the most important subjects of the financial sphere. It is deeply ingrained in our daily lives. We all work in large or small corporations. These corporations collect capital and then use it for production purposes. The financial calculations that are behind the attraction and successful deployment of capital are the basis of corporate finance.

Therefore, this part of the financial system has a direct impact on the creation of new technologies and the expansion of production capacities. This is due to the fact that corporate finance accounts for the bulk of the production funds of state and commercial organizations.

Who should study the fundamentals of corporate finance and why

  • Graduates of economic specialties: to learn how to plan the company’s budget and build financial models in order to work with confidence in the profession.
  • Financiers from related fields: to improve your professional skills and be able to earn more.
  • Aspiring entrepreneurs and CEOs: to understand how budgeting and financial analysis processes work.
  • Managers and project managers: to learn how to calculate the unit economy of a product and how to use it to manage project costs.

Participants in corporate relations are not only divisions of the company, but also founders, holders of securities, investors, creditors, public authorities. Their interaction ensures the integrity of the management process to ensure the efficiency of the company and increase its profits. At the same time, the state bodies have been given a control function, which consists in regulating the process of formation, expenditure, distribution, and investment of financial resources of corporations.

Adam Hansen