Corporate Finance Interview Preparation Guide

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Corporate finance describes the financial decisions of corporations. Its main objective is to maximize corporate value while reducing financial risk. The financial manager has responsibility for corporate finance decisions.

financial manager is responsible for financing the firm and acts as an intermediary between the financial system's institutions and markets, on the one hand, and the enterprise, on the other.

Finance is a term used to describe both the money resources available to governments, firms, or individuals, and the management of these funds.

★ Money and capital markets, which deals with securities markets and financial institutions
★ Investments, which focuses on the decisions made by both individual and institutional investors as they choose securities for their investment portfolios
★ Financial management, or "business finance," which involves decisions within firms.

Financial Management is the acquisition, management and financing of resources for firms by means of money, with due regard for process in the external economic markets.

Another objective of Financial Managers is Profit Maximization which entreats Financial Managers to put in place measures and policies that will increase the financial position of the firm. Shareholders need to receive periodic amounts to solidify their interest in the organization. A firm that does not make and declare profits continuously will not attract investors to put their money in it.

★ How much money should the firm invest, and what specific assets should the firm invest in? This is the firm's investment, or capital budgeting decision.
★ How should the cash required for an investment be raised? This is the financing decision.

Businesses and individuals who have Current accounts with banks, subject to the bank's regulations, may be allowed to from time to time withdraw amounts in excess of the balance standing in such accounts. The believe that the account may be credited with some funds later after which the bank would recover the overdraft and some service charges. Overdrafts are more likely to be made available to businesses that need short-term funds for a seasonal trade or for a specific contract.

Balance Sheet is a position statement as it refers to a particular date. It is also referred to as Statement of Sources and Application of Funds. It informs about the various sources used by the organization which are technically known as liabilities to raise the funds which are referred as assets.

Profitability Statement also known as Profit and Loss Account. It is a period statement as it refers to a particular period.