One of the missions of the company is to create value, but also to maximize it as best as possible, through the efficient use of financial resources. Shareholders must know how to manage their business and prevent crises, because at the time of being caught, their assets could be adversely affected.
To avoid this situation, it is advisable to carry out a valuation plan so that each partner is aware of the decisions that are made in matters of investment, sale of shares, financing, operations and dividends, among other aspects.
What does finance mean?
In every facet of our life, we must know how to handle our money. In the case of business, it is vital that the owners of a company develop and carry out planning techniques to ensure the future existence of the company. Investors should look for performance and perceive returns, without risk.
Managing a business successfully means giving the best use to perceived money. That is why shareholders should give the appropriate financing to investments, both short and long term. One way to increase the profits of the company is through the “good use” of the resources of another, that is to say, through the technique of “leverage”: borrowed funds are received and they are contributed to a business that yields in greater percentage.
Corporate finance measures the level of return on an investment, studying real assets (tangible and intangible) and raising funds, the rate of growth of the company, size of credit granted to customers, employee compensation, indebtedness, Acquisition of companies, among other areas.
Corporate Finance vs Accounting
Unlike accounting, which seeks to reflect, as accurately as possible, the transactions of the company; Finances focus on the future of it, but through the study of value. However, are corporate finances necessary? The answer is yes, here are some advantages of this process:
Help Prevent Results
Improve understanding of financial aspects
Drive Good Investor Decisions
They represent an approximation to the reality of the company
Throw data for business prediction and control
The most important mission of the executives of a company is to generate to the company the maximum creation of possible value, that is to say, to make the company worth more and more. When the capital that is invested generates a rate of return superior to the cost of the same, then it will be generating value.