Corporate Finance
Business isn't just about profit; it's about value creation. Learn about Time Value of Money (TVM), Capital Budgeting, and WACC to understand how to maximize shareholder value.
What is Corporate Finance?
Corporate finance isn't just for big multinationals. For any business, it boils down to answering three critical questions. These are known as "The Three Pillars of Corporate Finance":
1. Financing Decision
Where do we get the money? Should we take a loan (Debt) or sell shares (Equity)? This determines the Capital Structure.
2. Investing Decision
Where do we put the money? Which project gives the highest return? (Capital Budgeting - NPV, IRR).
3. Dividend Decision
What do we do with the profit? Reinvest it in the business or distribute it to shareholders?
In this module, you will learn the scientific methods and formulas needed to make these decisions effectively.
Lessons in this Module
7 LessonsTime Value of Money (TVM)
A dollar today is worth more than a dollar tomorrow. Learn the core concepts of PV & FV.
Capital Budgeting Techniques (NPV & IRR)
How to choose profitable projects using Net Present Value (NPV) and Internal Rate of Return (IRR).
Cost of Capital (WACC)
Calculating the weighted average cost of a company's funds (Debt & Equity).
Capital Structure & Leverage
Finding the perfect balance between Debt and Equity to maximize value.
Working Capital Management
Managing the day-to-day cash flow required to run the business operations.
Dividend Policy Decisions
When and how should companies distribute their profits to shareholders?
Financial Planning & Forecasting
How to predict future income and expenses to ensure financial stability.
Frequently Asked Questions (FAQ)
What is Capital Budgeting? ▼
Capital Budgeting is the process a business uses to evaluate potential major projects or investments, such as building a new plant or investing in a long-term venture. Methods like NPV and IRR are used to determine profitability.
Which is better: Debt or Equity? ▼
There is no single answer; it requires a balance. Debt is cheaper due to tax shields but increases financial risk (interest payments). Equity is safer (no mandatory payments) but dilutes ownership. The right mix is called the optimal Capital Structure.