Corporate business investment finance advice
This is the area of finance that deals with the decision-making process of corporations. Finance can be both short term and long term. There are many aspects of finance that requires expertise and experience. In global corporations, the finance function is a high-level position given its extreme importance to the very survival of the firm. Corporate finance is a specific specialty and is ideally suited for accountants and MBAs. The main purpose of corporate finance is to maximize returns to the shareholders by distributing profits through dividend payouts. Corporate finance is often mistaken for managerial finance. The former deals mostly with treasury functions while the latter is more properly concerned with the comptrollership function of a corporation. But the principles involved are basically the same, only in their areas of application are they somewhat different.
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With regards to short-term corporate finance, it deals with “working capital†decisions which might include such matters as inventory management (holding excess inventory is costly), management of cash balances on a day-to-day basis and short-term borrowings from financial intermediaries. This aspect needs constant monitoring especially when it concerns available bank balances. Firms may accept from customers and also issue their own checks likewise to their suppliers so an accurate record keeping is absolute essential to forestall unfunded checks.
Long-term corporate finance is concerned with raising of capital either through equity or through debt (bank borrowings). Equity capital can be had by issuing new or additional shares which will tend to dilute the stakes of existing shareholders. New investments are also under the responsibility of long-term corporate finance and how to fund these new investments. Another important function is deciding whether to declare dividends or not for the current fiscal year and how much to declare as dividends. The dividend payout ratio is usually based on the total profits for the year.
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A firm can generate capital by preparing a “sales presentation†to these potential investors. What is important is to have a business plan that is practical with financial projections on the conservative side. A realistic business plan is bound to impress hard to convince investors (who make sure they will not lose money by investing in the business based on wild business assumptions). Be prepared to answer tough questions and anticipate other surprises which investors may inquire about. In this regard, it is always better to ask for introductions to capital investors rather than resort to cold calls. A network of business associates can often point you in the right way whom to approach.
We will be carefully reviewing the top 100 or so sites in the Corporate Finance niche, including all the most popular and well-visited sites about Capital, Budgeting, Asset Management and other popular topics in the Corporate Finance sector.
The top 100 will be listed in order of client through-rate and popularity. This list will be dynamic and continuously updated. The top 10 sites will feature short reviews and the topmost 3 sites will have full detailed reviews completed by our editorial team including pros and cons, summary, best features, tips, etc. The topmost 3 reviews will be updated on a weekly basis.
If you have a Corporate Finance related website that you would like us to consider in our initial review of the top 100 in each major topic, please visit the contact us page and send us details of your site.
November 5th, 2008 at 12:52 pm
What is your investment strategy?
One of the oldest and most respected principles of investment is to “spread your risk”. Regardless of past performance, nobody knows the future with complete accuracy so most investors put money into a variety of different investments: property, company shares, unit trusts and cash being the most popular.
Why invest in Company Shares?
Simple: in the past investing in company shares (equities) has produced the best returns over the long term. In the past the biggest and most mature companies, those quoted on the London stock exchange, have produced excellent returns. But this has changed fundamentally with the advent of global competition and the impact of the “credit crunch”. Investing in the UK stock market is now more risky and the likely rewards are smaller.
So what is the alternative?
Where can you find capital growth? There is no simple answer but do consider investing in the shares of Early Stage Companies as part of your portfolio. These companies can grow rapidly and this growth can generate substantial capital gains for you. In addition most qualify for EIS tax relief. This means NIL capital gains tax and NIL inheritance tax if you invest in your children’s names. The Government gives EIS tax relief because it knows that Early Stage Companies are the main creators of jobs and future wealth in the economy. Of course the risk is higher (see how our investors manage the risks involved) but there is simply no such thing as a risk free investment: even cash deposits risk losing value over time due to inflation