Importance of Corporate Finance
1. Strategic Decision-Making: It complements in taking such decisions which concern investments, financing and capital allocations ensuring they coincide with the long-term goals.
2. Maximizing Shareholder Value: Though this can be achieved through effective resource and financial organizational approaches, the main goal of corporate finance is to improve the company profitability, attract investors, and raise shareholder wealth.
3. Optimizing Capital Structure: Establishing the balanced debt-to-equity ratio ensure costs minimization, keeping down capital expenditures and providing a great financial flexibility.
4. Facilitating Growth and Expansion: Capital availability allows businesses to undertake pursuits of growth options, venture into new markets, and improve their competitive edges.
5. Managing Financial Risks: While the corporate finance functions include the variety of financial risks identification, assessment, and management, it also plays a significant role in ensuring the company’s financial stability during the fluctuations of market conditions and operational difficulties.