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Corporate Finance:
Every decision taken in a business has its own financial implications, and hence any decision that involves the use of money or in monetary terms is a corporate financial decision. Science of dealing with corporate or business enterprises that requires dealing with major financial decisions with the help of tools that they possess is termed as corporate finance. This subject deals with capital investment, investment banking, assets and liabilities, dividends and shareholders.
Various corporate finance principles are as follows:
1. The Investment Principle: It involves investment in assets and projects that give way a return greater than the minimum acceptable hurdle rate.
2. The Financing Principle: This principle holds that one should choose a financing mix of debt and equity that maximizes the value of the returns.
3. The Dividend Principle: If there are not sufficient investments that can even earn the hurdle rate, then return the cash to the owners of the company.
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