3 Major Factors That Affects Corporate Finance of a Company

A division of finance that deals in the financing, investment decision, and capital structuring is termed as Corporate Finances. These finances comprise of the tools and analysis for the utilization and proper distribution of financial resources.

Corporate finances help gain the shareholder's maximum value for the money they had invested in the company, whose financial aspects are adequately handled by the management. It is the sole responsibility of the management to ensure that the shareholders receive the maximum return in the form of increased share prices and dividends. Nature of Corporate Finances differs from company to company and mainly depends on the area in which the company deals in.

Three factors that majorly affect the Corporate Finances of a Company are:

1. Investments and Capital Budget: It basically includes the planning of placing the long-term capital assets of the company to generate maximum returns with risk-adjusted. Investments and capital budgeting mainly comprise of opting an investment opportunity with the help of extensive financial analysis. A company with the help of investments and capital budgeting identifies capital expenditures, compares planned investments, decides the project to include in the budget, and estimates cash flows. 
2. Capital Financing: Capital financing helps make decisions on how to finance capital investment in a better way with the help of business’ equity, debt, or both. The stocks of the company can be sold or debts can be introduced in the markets with the help of investment banks to receive long-term funding for capital investments. Equity and debt must be balanced and closely managed since too much of debt can result in the increased risk of default repayment. Whereas, dependency on equity may result in dilution of earnings and value for original investors.
3. Dividends and Capital Return: This helps decide whether excess earnings in the business should be retained for future investments and operational requirements or whether it should be distributed to shareholders in the form of dividends or share buybacks. For business expansion, funds from retained earnings can be used since they are not distributed back to the shareholders. If a return rate on capital investment greater than Company’s capital cost can be earned, managers might pursue it, else, should be returned in the form of dividends or share buybacks.

Corporate Finance for Political Funding – Real Picture & Propaganda Picture

Please bookmark this page under the portfolio where you save the write-ups related to corporate finance. Read it today and read it again on the 23rd of May, when the results of the election will be out. During this period please consult certain other literature as well, for instance, famous novelist Ravi Subramanian presented a dark picture of the allies of the corporate finance world. His narrative presents a glamorous picture of the corridors of corporate finance. Please read to the article that published in Bloomberg on March 17 where they raise some issues related to the corporate finance in political funding. In this article, they have listed the top 10 corporate finance donors in the year 2018. In order to do it, they took the support of an electoral trust (Chaudhary, 2019).

Anybody who understands the jargon of corporate finance can make a hypothesis about the role of these electoral trusts. Can we consider them as an investment in the ideologies of a political party by a corporate giant? In order to understand the nitty-gritty of corporate finance, book a free consultancy with an expert working in RESURGENT INDIA, they are always keen on imparting client education; you can brush up your knowledge about corporate finance, right from the horse’s mouth.

Corporate finance is a matter subjected to the financial markets; it is an administrative domain where political ideologies cannot do much. Another point of view says that corporate finance is an issue which is dependent on a PESTAL analysis and this donation through electoral trust is an attempt to gain better control over certain political factors associated with the business?

Corporate finance is an area where huge stakes of money exchange hands to attain long term gains. The corporate finance in India has already reached to the new levels where small investments can fetch huge profits if as an investor, you are aware of some "out-of-the-box" factors that are far beyond the spreadsheets and signals coming out of the projections made by the companies. 

The introduction of the electoral trust is a new chapter in this book. If you are planning to invest money in an area where corporate finance activities also hold a stake then, you need to keep an eye certain new areas as well. After 23rd May this article will serve as a reminder for you to go for a PESTAL analysis prior to investing in the market.

Bibliography

Chaudhary, A. (2019). A Murky Flood of Money Pours Into the World’s Largest Election. Bloomberg, https://www.bloomberg.com/graphics/2019-india-election-funds/.