CFM3101 - Understanding loan relationships: introduction
What is corporate finance?
Corporate finance covers the raising of funds and the managing
of money by companies.
In a small company this might involve the director deciding
whether to borrow from the bank or from a relative. In a large
multi-national company it might involve the finance director
weighing up the costs of issuing debt in the international money
markets in a currency other than sterling or entering into a
complex securitisation arrangement to raise further funds.
The small company director might consider whether to invest
surplus funds in a deposit account or lend surplus funds to another
business. The finance director of the large multi- national may be
considering investing in eurobonds (
CFM3202c) or
financing the takeover of another company by one of its
subsidiaries.
At whatever level, these activities constitute corporate
finance. There are other ways that corporates may obtain funding,
such as issuing shares (
CFM3256), acquiring assets on leases or
through securisations (
CFM3304).
There are some commercial circumstances where the issuing and
buying and selling of debt become an important feature. You will
find more detail about
