“Financial Freedom Files: Strategies for a Secure Future”

Typically, then, “corporate finance” relates to the long term objective of maximizing the value of the entity’s assets, its stock, and its return to shareholders, while also balancing risk and profitability. This entails three primary areas:

Capital budgeting: selecting which projects to invest in – here, accurately determining value is crucial, as judgements about asset values can be “make or break”
Dividend policy: the use of “excess” funds – are these to be reinvested in the business or returned to shareholders
Capital structure: deciding on the mix of funding to be used – here attempting to find the optimal capital mix re debt-commitments vs cost of capital.

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