Corporate Finance Training is an important part of finance where entire economic strength lies. The prime responsibility of corporate finance is to increase the corporate value without taking high risk.

It is all about the corporate financial decision-making, which is like a motor, pump lifeblood of business (finance) into the corporate.

This discipline is divided into short term and long term based on the financial decision-making process and techniques. Long term part includes taking decisions for long term investments, such as investing into debts, equities, projects, M&A, etc. Short term includes working capital management, which deals with day-to-day capital requirement for running corporate.

We can see each important functions of this Corporate Finance Training management in details below.

Capital investment decision: -

Longer term financing decisions includes purchasing of fixed assets and the entire capital structure. These decisions should be made in such assets or project, which is having a positive net present value. NPV is calculated by using a special discount rate (normally expected rate of return on investment). Capital investment decision includes thus investment decision, financing decision and dividend decision.

* Investment decision:- the allocation of limited resources among equally competent projects by

the management is being called as capital budgeting. Capital budgeting is the important part of an investment decision. Capital budgeting requires estimation project values, time frames, size and expected future cash flows.

* Project valuation:- usually project valuations are made by using DCF (discounted cash flow) method and highest NPV (using Fisher*s Separation Theorem) will be selected for investment. This requires the estimated total size and time frame of cash flow (both present and future) of the project. Project valuation is being influenced by the discount rate, which is used for calculating the net present value of the project or asset. This discount rate is being calculated by using CAPM (Capital Asset Pricing Theory) or APT (arbitrage pricing theory). Weighted Average cost of capital method will be used for valuation if the firm is levered.

* Valuation Flexibility:- there are several cases where this DCF cant project the accurate values, like valuation of an R&D project which can be either close related to the path or distant. Thus DCF tool will not give flexibility in valuation, so a separate valuation technique is being used here. They are Decision Tree Analysis and Real Option.

1. DTA:- this approach attempts to include most likely events and resultant management decision into valuation. According to this DTA model each management decision will form a branch or path, which the company should follow. Say for example management cant go into step 3 after the successful completion of step 1, it should follow the chain. Only after the successful completion of step 2 only they can enter step 3. In DCF method there is no chain or braches.

2. Real Option:- This approach used only when the value of project is contingent on the value or price of other underlying asset. For example, while valuing a mining project, consideration of gold price is inevitable. If gold price is very low, project will not should a better value.

* Financial Decision:- in order to achieve the goal of Corporate Finance Training management financial decisions must be made appropriately. Remember the proverb it is easy to spend, but difficult to invest the same strategy should be applied here in corporate finance while making financial decision. Corporate can source its funds required for long-term investment through either issue equities or debts. Short term financing can be done through OD or rupee loan or PCFC, etc.

* Dividend Decision:- Management must decide appropriately taking into account all the opportunities and condition of the business whether to invest the surplus into new protest or to plough back or to declare dividend to share holders.

Working Capital Management:-

WCM comprises decisions about working capital or short-term Corporate Finance Training. This is basically all about the management of current asset and current liabilities. Here it should be managed in such a way that liquidity position of the corporate must be in equilibrium. Ideal current ratio is 1:2. The managements goal is to maintain a smooth flow of business operation through financing all the short-term capital requirements, like redemption of short-term debts, operational expenses or day-to-day expenses.

Financial Risk Management:-

This is one of the important areas of corporate finance. The company that shoulders various risks like business risk, foreign currency exchange risk, interest rate risk, etc must manage it in such way so that over all risk can be minimized. It is the ability of the management to limit the risk and unlimit the reward. For managing foreign exchange risk derivative products are available, which is basically a financial instruments whose values are being derived from another underlying asset.

Business risk is always there and only up to a certain extend can be managed. The main tool used by the management for controlling business risk is market research and reduction of exposure if condition is not favorable.

Interest rate risk and credit default risk:- this risk can be managed by using swaps. This is basically a kind of contract where we can lock or unlock interest rate. This kind of swap product is being called as interest rate swaps. Another instrument used for credit default risk is being called as credit default swap.