Functions of Corporate Finance Solution Manual Briefs You
Corporate finances is the finance branch dealing with the
capital structure of an organization. It emphasizes on funding sources, capital
structuring, and investment decisions. Primarily, it is concerned with
maximizing the shareholder's value through long and short term financial
planning implementing various strategies. To reduce financial risks to
corporate sectors, several functions of corporate finances plays essential
role. Additionally, the ideas are used to boost the profit of the corporations.
In this post, we highlight its few essential functions mentioned in Corporate
Finance 3rd Edition Solutions Manual.
Although corporate finance deals with cash flow in corporate
organization, it is incomplete without these critical functions mentioned
below.
External financing by corporations
Whether its small or big corporations, they must usually
must raise equity capital privately, investors, friends and family. These
professionals are specialized to invest in high risk or high return business
assets. Once the entity touches the certain point, they may decide to accept
external financing in form of IPO (Initial Public Offering) of stock selling to
outsiders and listing their shares in stock market. After this, business have
the option of raising funds by selling additional stocks in the future. If you are a management students looking to
understand the functions of stock trading, purchase the Corporate Finance
Berk De Marzo 3rd Edition Solutions
Manual.
Capital Budgeting
Capital budgeting is another function of corporate finance,
representing a firm’s financial manager’s essential activity. Managers evaluate
the large investments in the first step of the capital budgeting process. The
second step in this process when the company prosper in a competitive economy
only be seeking out of the most promising products, processes, and services to
consumers. Intel, General Electric, Shell, Samsung and Toyota are few firms who
perform this function to raise their capital.
Risk Management
Business is the second name of risk, either you fall, or you
raise. Earlier, risk management has been associated with natural disasters
historically, due to which business firms introduced insurance products. It
helps to manage those disaster exposures. In modern times, risk management
function identifies measures and manages the risk exposures, including
predictable business risks. These exposures can result from adverse interest
rate movement, commodity price changes, and currency value fluctuations. It is
considered the most sophisticated of all corporate finance practices. It
attempts to quantify the sources and magnitudes of firms risk exposure and to
decide whether to accept these risks or to manage them.
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