What is corporate finance for, why should you be interested in it, and what are its fundamentals based on? This is what we will learn in this new article from the Business management masterclass for entrepreneurs, business leaders, and managers on Tulipemedia !
This content is part of the course “Business Management for Entrepreneurs: A Complete Course to Better Manage Your Business” find it on Tulipemedia.com 💰📈
🎯 What you will discover:
-
Understanding what corporate finance is
-
Identify your major missions
-
Differentiate corporate finance from accounting
-
Know the stakeholders of the financial function
🧠 What is corporate finance?
There corporate finance is the discipline that deals with the management of money within an organization. It seeks to optimize the allocation of financial resources For maximize the value of the company.
She answers questions like:
-
Should we invest in this project?
-
How to finance business growth?
-
Is the company profitable?
-
Can dividends be distributed?
-
Is the company solvent and sustainable?
🛠️ The main missions of corporate finance:
-
Analyze the financial health of the company (reading the balance sheet, income statement, etc.)
-
Decide investments (buy a machine? launch a new product?)
-
Finance projects (loan, capital, self-financing, etc.)
-
Manage cash flow (available cash, incoming/outgoing cash flows)
-
Create value for shareholders and stakeholders
🧾 Finance ≠ Accounting
| Accounting | Corporate Finance |
|---|---|
| Follows the standards (regulatory) | Makes strategic decisions |
| Describe what happened | Projects into the future |
| Used for tax/legal obligations | Used for management and strategy |
| Produces the balance sheet, income statement | Use numbers to decide |
🧑💼 Stakeholders in the financial function:
-
General Management : expects solid strategic decisions
-
Investors / shareholders : want a good return on investment
-
Banks / Creditors : want to be reimbursed with security
-
Suppliers : want to be paid on time
-
Customers : depend on the solidity of the company
-
Employees : expect stable wages and investments in the future
✅ What to remember:
-
Corporate finance is a strategic management tool.
-
It helps allocate resources to the right place at the right time.
-
It is focused on long-term value creation.
-
It is not limited to numbers: it anticipates, assesses risk, and informs decisions.
Corporate finance is inherent in the accounting that we briefly covered in the previous chapter, and it comes to interpret what accounting has made it possible to establish, on the basis of documents that are both legal and analytical. And the most famous documents, and yet the most misunderstood by business leaders, young entrepreneurs and managers, are of course the balance sheet and the income statement, which we will deal with in the next chapter.
Do you have a business and want to regain control of your margins and your business model? Discover my solution Ultimate Business Dashboard which transforms your raw accounting data into performance indicators and a monthly dashboard.
Feel free to subscribe to the blog and comment, and I'll see you soon for the next chapter,
👉 Next Chapter: Understanding the Balance Sheet and Income Statement
📖 Back to Table of Contents
