What is Corporate Finance? Fundamentals, Principles, Features of Corporate Finance

What is Corporate Finance? Meaning of Corporate Finance

Corporate finance is the finance required for running a corporation or joint-stock company. Today no business can survive without finance. Finance is the life blood of any organization; no economic activity can be carried out without finance. Finance is required throughout the working life of a company. It acts as a lubricant keeping machinery of business in a continuous state of activity.

Definition of Corporate Finance

According to B.O. Wheeler the definition of corporate finance are: ↓

“Corporate finance / business finance is that business activity which is concerned with the acquisition and conservation of capital funds in meeting the financial needs and overall objectives of business enterprises.”

According to Guthmann and Dougale the definition of corporate finance are: ↓

“Business finance can be broadly defined as the activity concerned with planning, raising, controlling and administering of funds used in the business.”

Process of Initial Public Offering (IPO)

Steps of Initial Public Offering (IPO)

Steps to make an initial public offering (IPO) are given in the image below.↓

Image credits © Manoj Patil.

Functions of Stock Exchange, Role of Stock Exchange

Functions of Stock Exchange and Role of Stock Exchange

Role, benefits and function of stock market are given in the diagram below.↓

Image credits © Manoj Patil.

What is Stock Market? Features of Stock Market or Stock Exchange

What is Stock Market?

What is stock exchange market are given below. ↓

The secondary market facilitates trading i.e. buying and selling of securities. It is also called as Stock Market. The activities of Secondary Markets are undertaken by Stock Exchanges.

Stock market / Stock exchange is one important constituent of capital market. It is an organized market for buying and selling of shares and other securities.

It is a place or mechanism through which the stock, shares and other long-term investments are bought and sold. These types of securities are issued to joint-stock companies and public bodies by State and Central Governments.

Methods of Raising Funds from Primary Market

Methods of Raising Funds from Primary Market

Methods of raising capital from primary market are given in the image below.

Image credits © Manoj Patil.

What is Primary Market? Functions of Primary Market

What is Primary Market?

what is new issue market are given below: ↓

Primary Market is a Market for new issue of securities, which are issued to public for first time. Primary market is also known as New Issue Market. It is used by both new and existing companies. The company issues new shares and debentures for collecting long term funds. The purchaser of new shares and debentures may be businessmen, customers of the company, employees of the company, existing shareholders, etc. The issue of securities is made through the prospectus. Functioning of primary markets facilitates the capital formation by channelizing of funds from individual savers into proper productive investments.

Methods of Raising Funds from Capital Markets

Methods of raising funds from capital markets

A capital market is for investing funds in debentures, shares, bonds, etc. of companies. Investors can invest their funds in a safe and profitable manner through stock exchanges. Method of accessing means a way of getting to a place. Firms and institutions can raise medium and long-term funds by way of tradable securities and non-tradable securities.

Methods of Accessing funds from capital markets are given in the diagram below. ↓

Image credits © Manoj Patil.

Functions of Financial System, Functions of Financial Market

Functions of Financial System, Functions of Financial Market

Functions of Financial System are given in the diagram below.↓

Image credits © Manoj Patil.

Indian Financial System and Classification of Financial Market

Indian Financial System

Financial System refers to the financial needs of different sectors of the economy and the ways and means to meet such needs efficiently and economically. Funds are required for meeting various monetary needs.

The financial needs are met from different sources and agencies.

Indian financial system are given in the diagram below. ↓

Image credits © Manoj Patil.