Corporate Finance (Part I: The Scope)

Corporate finance focuses on how companies can obtain funds to finance their activities on how to invest these funds to generate value, taking into account the risk involved.

Finance, as a discipline of economic and business sciences, is structured to meet the financial needs of companies due to the boom in growth of industries and services.
Finance studies how to get the most out scarce financial resourses, and they are divided into personal finance, corporate finance and public finances. Corporate finances focuses on how companies can obtain funsd to finance their activities and how to invest these funds to generate value.
Most business decisions, whether production. marketing, human resources, etc... they have financial implications and, therefore, affect corporate finance.
The main objective of corporate finances is to raise the value of the company and therefore, that of the actions that make un the social capital. Finding a balance between the subjective profitability, risk and liquidity.

• Profitability seeks to achieve the maximum return on investments made.
• Profitability management is linked to risk management, since more profitability implies more risk and vice versa. Irrigation refers to the possibility of having losses that reduce the value of the company.
• An adequate level of liquidity allows to face the different payment commitments, which is essential for company´s financial director, who in many cases is advised by specialized consultants.
  
  The main concern currently shared by most financial managers is the optimization of working capital, which leads to the dynamic knowledge of the cash position, the improvement of operating cash flow, a collection management to customers and payment to suppliers that optimizes the cash conversion cycle.
  The reduction of financing cost and search for new sources, and the need to review the models and processes used to increse productivity.