The department of corporate finance has the responsibility to govern and manage the firms in taking financial and capital investment decisions. This includes deciding whether to pursue a new venture and decide about cash flow for investment that provides equity, debt, or both.

Essential Functions:  The term corporate finance is often related to the decision of the company's decision to take capital investments and many other investment-linked related decisions. Corporate finance oversees short-term monetary decisions that have ill effect operations. Moreover, capital investments have a contribution to corporate business finance in identifying and sourcing of capital investment. It also includes whether shareholders should receive dividends.

The study of corporate finance in MBA deals with capital investments and deploy long-term capital of a company. The decision is primarily concerned with budgeting of capital. Using capital budgeting, a company may be able to identify capital expenditures, estimation of its future cash flows originated from proposed equity-related projects. It also compares planned investments with a potential proceeding and considers which project to be considered for finance, including its capital budgeting.

Investment of capital is considered the most vital kind of corporate finance activity that can have a severe business impact. Poor capital budgeting, like excessive investment or under-funded investments, can cooperate with a company's financial status due to increased financing capital costs or underrated operating capacity.

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The division of corporate financing comprises the activities linked with the decisions of:

  • Financing,
  • Investment and
  • Capital Budgeting Decisions.
  • Capital Financing

The department of corporate finance is also responsible for capital resourcing in the form of a debt-equity ratio. A company can borrow from the government and private banks and other financial institutions or issue debt securities in the share markets through investment banks. A company can also select to sell stocks to investors when a large amount of capital is necessary for business expansions.

Capital finance can balance the financial activity in deciding on the relative comparison of the amounts between debt and equity.

Liquidity for a short time

Corporate Finance Assignment is also responsible for short-term management of funds, where the objective is to confirm that there is sufficient liquidity to continue operations. Short financial management takes care of current assets and liabilities or related to working capital and cash flows. An organization must be capable of meeting all its current obligations related to liability when necessary. This is related to have enough existing liquid assets. Short-term financial management may also get additional credit lines.

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Some Related Terminology: 

Capital: Capital is a financial term that is usually associated and comes with a cost. Companies submit reports on capital conditions in their balance sheet and try to optimize their total capital cost.

Cost of a Specific Capital: Cost of capital is the desired return for a company to make particular budgeting of money, like the construction of a building or a new factory.

Interpretation of Financial Statements: Financial statements mean the activities of keeping records that may carry out business activities as well as the financial performance of a company. It consists of:

  • The Balance Sheet,
  • The Income Statement, and
  • Cash Flow Statement.
  • Meaning of Transparency

Transparency: This term indicates the ability of a company or by an investor to access and obtain financial data of a company that is related to price, market position, and audited financial reports.

Method of display: How a cash flow statement demonstrates a company's cash appropriation. The term appropriation indicates the event when money is invested for a specific business.

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