Corporate Finance Overview
What is Corporate Finance? Corporate finance deals with a corporation’s capital structure, including its funding and the actions management takes to increase the company’s value. Corporate finance also includes the tools and analyses used to prioritize and allocate financial resources. The ultimate purpose of corporate finance is to maximize a business’s value by planning and allocating resources…
Investor Influence
What is the Significance of Investor Influence? The level of investor influence a company holds in an investment transaction determines the method of accounting for said private investment. The accounting for the investment varies with the level of control the investor possesses. What are the Varying Levels of Control? An investor can hold majority ownership or…
Investment Methods
What is an Investment? A financial investment is any asset or instrument purchased with the intention of selling said asset for a price higher than the purchase price at some future point in time (capital gains), or with the hope that the asset will directly bring in income (such as rental income or dividends). This…
Distressed Debt
What is Distressed Debt? Distressed debt refers to the securities of a government or company that has either defaulted, is under bankruptcy protection, or is in financial distress and moving toward the aforementioned situations in the near future. It includes all credit instruments that are trading at a significant discount and have a spread substantially…
Settlement Period
What is Settlement Period? Settlement date is a term used in the securities industry to refer to the period between the transaction date when an order is executed to the settlement date when the security changes hands and payment is made. When the seller and the buyer enter into a trade, each party in the…
Settlement Date
What is Settlement Date? Settlement date is an industry term that refers to the date when a trade or derivative contract is deemed final, and the seller must transfer the ownership of the security to the buyer against the appropriate payment for the asset. It is the actual date when the seller completes the transfer…
Sales Risk
What is Sales Risk? Sales risk refers to the uncertainty relating to the price and quantity of goods that are available for sale to consumers. Usually, sales risk may result in sales failures, and it can significantly affect the reported financial performance. Protecting the business against the sales risk can help build resilience in a…
Hurdle Rate Definition
What is a Hurdle Rate? A hurdle rate, also known as the minimum acceptable rate of return (MARR), is the minimum required or target rate of return that investors expect to receive on an investment. The hurdle rate is determined by assessing the cost of capital, the risks involved, current business expansion opportunities, rates of…
Spin-Off
What is a Spin-Off? A corporate spin-off is an operational strategy used by a company to create a new business subsidiary from its parent company. A spin-off occurs when a parent corporation separates part of its business operations into a second publicly traded entity and distributes shares of the new entity to its current shareholders….
