Corporate finance is the area of finance that deals with sources of funding, the capital structure of corporations, the actions that managers take to increase the value of the firm to the shareholders, and the tools and analysis used to allocate financial resources. Corporate finance refers to activities and transactions related to raising capital to create, develop and acquire a business. It is directly related to company decisions that have a financial or monetary impact. It can be considered as a liaison between the capital market and the organization. The ultimate purpose of corporate finance is to maximize the value. It can apply to products, services, companies, management, and of a business through planning and implementation of resources, while balancing risk and profitability.
In short, corporate finance focuses on how to maximize the value of the company through its financing and investment decisions, which is how to best raise money and use it. Corporate finance departments are charged with governing and overseeing their firms’ financial activities and capital investment decisions. Corporate finance is concerned with how businesses fund their operations in order to maximize profits and minimize costs. It deals with the day-to-day operations of a business’ cash flows as well as with long-term financing goals.