Importance Of Corporate Finance

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Corporate finance is essentially concerned with the process of maximizing shareholder value by implementing various strategies through long term and short term financial planning. It mainly consists of capital investment decisions to investment banking decisions. The principles of finance involves issues such as determining how to value a stock, cost of capital, and time value of money. These are just the few important issues that investment bankers deal with every day. In order to get in the field of corporate finance, it also requires a rigorous work ethic and education to get there. Through this essay I will explain the importance of corporate finance in the business world, the principles and concepts behind it, the education needed to get …show more content…

Like I said before, the concept of corporate finance is to make smart investment decisions by implementing various strategies through long term and short term planning. Some very important concepts of corporate finance are real options analysis, cost benefit analysis, financial analysis, and financial ratio. These are used widely by bankers, investors, analysts of the many different fields of finance. Real options analysis helps by evaluating the call and put options which are helpful in making long term capital investment decisions. Cost benefit analysis helps determine the total input in a project and receive results from that project which leads to identifying the options where the investments can be made. A group of financial analysts begins the financial analysis which is used to decide where a business is profitable or stable. One of the most well-known concepts is financial ratio. It is used to compare two similar companies by checking their financial statements, return on income, and return on …show more content…

A corporate finance job carries a lot of responsibilities. It is important to be precise and efficient when analyzing vast amounts of data because one single error can cost a business or company a fortune. There are three different types of paths a person interested in corporate finance can take. The first path is an entry level position which takes on the role of a financial analyst or business analyst. It requires a Bachelor’s degree in finance or economics. It also requires great communication and analytical skills. The second path is a mid-level position which takes on the role of a strategic planner or senior financial analyst. This requires an MBA with a focus in either finance or economics. You must also be able to demonstrate high quality performance and attention to detail and it has the same entry- level requirements. The last path is a senior level position which takes on the role of treasurer or chief financial officer (CFO). These are usually the people who are the top one percent of the field of finance. They must have an excellent track record and leadership in the field. They must know the ins and outs of the industry and have solid management skills. Therefore, to succeed in the corporate finance world, you need make wise business decisions, strong attention to detail, and be as precise and efficient as

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