Corporate finance denotes the finance mechanism used by the corporates or the companies (public and private) to analysis any financial decision based on the expected outcome of the decision. Corporate finance also deals with the tools and process to calculate the expected outcome (profit or loss) from any kind of financial decisions.
The primary aim of corporate finance is to enable the companies to take the wise financial decisions which will increase the shareholders’ value in the long run.
The main rationales behind the corporate finance are
All these expand or business decisions need capital investments and thus need proper corporate finance in place to calculate the expected outcome of those decisions. Wrong financial calculation can lead to wrong decision by the management which can incur severe loss for the company.