CORPORATE

FINANCE

Corporate finance is the study of a business money related decision, which are essentially all of the business decision. The primary goal of finance is to figure out how to maximize a company value by making goal decision about investment, financing and dividend.

1] maximization of market share 2] profit maximization objective 3] size\ Revenue objective 4] Social Welfare objective

1. 2. 3. 4.

Research & Development Motivating employee Promoting a company Smooth conduct of business

Equity financial option

Debt financial option 1. Bank 2. Bonds

Equity choice for private firm

Equity choice for public firm 1. Common stock 2. Warrants 3. Contingent value rights.

1. Owner equity 2. Venture capital & private equity

TYPES OF LEASE FINACING

1. 2. 3. 4. Operating Lease Capital Lease Net Lease Combination Accounting Lease

1. 2. 3. 4.

Money management Record keeping & recording The control function The advisory function

1. 2. 3. 4. 5.

Commercial Bank Investment Bank Insurance Companies Brokerage Investment Companies

1. LONG TERM 2. MEDIUM TERM 3. SHORT TERM

OWNED CAPITAL

BORROWED CAPITAL
Debenture\ Bonds
Term loans\ Institution finance

Equity share
Preference share

EXTERNAL

INTERNAL

Public Deposit

Commercial paper

Retained Earning

Advance from customer

Bank Credit

Trade Credit

1. OPERATING LEVERAGES 2. FINANCIAL LEVERAGES 3. COMBIEN LEVERAGES

OPERATING LEVERAGE =

C EBIT EBIT EBT

FINANCIAL LEVERAGE

COMBOEIN LEVERAGE

O.L x F.L