What are the characteristics of corporate finance?

Characteristics of corporate finance includes −

  • Financial activity − This kind of duties are done by financial manager and consists activities like planning, raising, investing and monitoring the finance of the company.

  • Raising the finance − It is raised through shares, debentures, bank loans etc. New companies will face difficulties to raise finance, whereas established companies can do it easily because of their reputation.

  • Investing the finance − It will help in purchasing the fixed asset to fulfil the company objectives.

  • Objective oriented − The main objectives are to earn maximum profits, to pay regular dividends to shareholders and to create a future growth by maintaining proper reserves.

  • Types of finance − Proper finances should be maintained either by long term or short term to meet companies long term and short term needs.

  • Relationship with other departments − Inter relation should be strong between all departments.

  • Dynamic in future − Corporate finance is dynamic in nature. It will change from time to time. So, it is important for finance manager, according to market, to invest their money to get regular profits.

  • Requires proper planning and control − Planning and control plays an important role in corporate finance. Corrective measures should be taken, if amount is not invested properly.

  • Managing finance − Managing finance is not easy, it is an art because, it requires proper skill and best judgement by a systematic approach.

  • Legal requirements − Company has to follow rules set by SEBI right from controlling of capital etc. sole trade firms need not to follow these rules.

  • Business management − Business management is an important part in corporate finance. It is required to carry out business smoothly by expansion, diversification, modernisation etc. and also required to pay their taxes, dividends and interests.

Updated on: 12-Aug-2020


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