Introduction

Corporate finance is all about the finance of companies. 

Corporate finance is the area of finance dealing with the sources of funding and the capital structure of corporations and the actions that managers take to increase the value of the firm to the shareholders, as well as the tools and analysis used to allocate financial resources.

Functions of corporate finance:

1. External financing function
   Raise capital to support firm's operations and investment programs.
2. Capital budgeting function
   Selection of best project to invest.
3. Financial management function
   Manage firm's internal cash flow and its mic of debt and equity.
4. Corporate governance function
   Ensure managers behave ethically and make decisions to benefit shareholders.
5. Risk management function
   Managing firms' exposures to all types of risk. Therefore trying to maximise shareholder value.

Types of decisions a finance manager faces:

1. Financial Decisions:
   Firm must decide whether to raise more money from new and existing owners, borrow the money instead(debt) or bye selling more shares(equity)
2. Investing Decisions
3. Managerial Decision:
   Financial manager must ensure that the firm has enough cash in hand to meet its obligations at each point in time.

Legal forms of business organisation:

• Sole proprietorship
• Partnerships
• Corporations

Roles of Corporate Finance Manager

1. Maximise profit
2. Maximise Earning per share (EPS)
3. Maximise shareholder wealth
4. Focus on stakeholders

Agency Problems: conflicts of interest between the shareholders and management of a firm.