Corporate Finance Assignment
Corporate finance assignment is a difficult assignment for students of finance. Students have to deal with a branch of management studies as well as refer to all the financial activities undertaken by a company in order to maximize value of shareholders. Wide variety of short term and long term decisions are involved as well as financial planning and various financial strategies implementation. From investment banking to investment analysis it all falls under the domain of capital finance assignment. Some of the major areas of corporate financing are, Sources of finance, Assessment of financial situation of a company, Capital budgeting or Investment evaluation and Risk management and Investment banking.
Sources of finance
Company can withdraw capital from the three major sources. Following are the three major sources:
In corporate finance debt capital plays an important role. In order to finance the new project or reconstruct an existing project or sustain ongoing project a company may borrow money. This borrowed capital could be collected from various sources such as notes payable, bank loans or bonds issued by the company. Regular interest payments in lieu of bonds are required to be made until the date of maturation when the entire debt amount will be paid by the company. The company can also take a decision to make a payment of borrowed debt in annual installments over and above the interest.
By selling the shares of the company in the capital market a company could raise money. In the hope that the market value of the share will increase thus making an investment profitable, shareholders make an investment in the company’s share. Companies which give a high rate of return to their shareholders are which investors prefer buy to shares and stocks. Experts helps students to get more idea about the equity capital as this capital is very complicated to understand and requires lots of details.
Preferred stock is an equity security and it is more important than a common stock. However, it carries only a promise of dividend without any voting rights in company’s financial decisions.
Assessment of the financial situation of a company
Assessment of financial situation of a company is a difficult task for students experts help is required in order to complete assignment on assessment of the financial situation of a company. An investor needs to have a keen knowledge about the current financial position of the company in order to make an investment. In order to convey its financial performance to investors, shareholders and in general to the market, companies use financial reporting method. According to the generally accepted accounting principles all publicly listed companies needs to state their quarterly or annual financial statements. According to international accounting standards independent authorities can examine these statements. An informed decision about the investment prospects of the company can be made by the investors after looking at these financial statements. There are three different types of accounting statements, following are the three different types of financial statements:
Statement of income:
It analyses the net profit of the company for a given financial period. In order to get this net profit the expense from the revenue earned is subtracted.
Cash flow statement:
Cash flow investment shows the inflow and outflow and cash in a company for a specific financial period as well as the effect they pose in the equity of shareholders. It is usually given by the formula, that is;
Retained earning = Beginning capital + Net income – Dividend
It gives a complete view of the financial state of the company at any given point of time; it is given by the expanded accounting equation:
Assets = Paid in capital + Revenue – Expenses – Dividends – Treasury stock
In order to have a clear and better understanding of these financial statements students needs a help of experts. They will help in understanding these statements with more ease, thus making the financial assignment simpler for students. It will help students to score better grading in their academics.
Capital Budgeting/Investment Evaluation
Investors need to be alert about the future investments of the company apart from the financial statements. In corporate finance capital budgeting is the very important instrument. It helps in determining whether a long term investment of the company is worthwhile or not. In order to allocate upcoming projects’ resources as well as to find out the values of current projects large corporations often use capital budgeting and it is also known as ‘investment appraisal’. Capital budgeting also helps in determining the dividends paid to shareholders. There are many methods which are used for capital budgeting. Some of these methods are explained below:
Accounting rate of return: It is the rate of return from the net income of the proposed capital investment in known as an accounting rate of return.
Payback period: The second most important method to decide the dividend of the shareholders is the payback period. Payback period refers to the period of time that is necessary in order to recoup all investments made on the project to reach a break – even point.
Profitability index: It is a ratio of payback to the investors which is divided by the investment been made.
Net Present value: Net Present Value is the sum total of all the cash flow values including both incoming and out coming for each project.
Internal rate of return: Internal rate of return is a discount rate that makes the present value of all cash flows from a particular project equal to zero. Thus, internal rate of return is that rate where the investments behind the project reach a breakeven point. It is often used in order to rank projects of investment. The project with the highest internal rate of return is used first, thus given more priority.
Modified internal rate of return: This is a modified version of internal rate of return. Internal rate of return has one shortcoming that is it often used to calculate project’s actual annual profitability anyhow intermediate cash flows are not taken into account. Thus the actual internal rate of return is lower than what it is calculated. That is why modified internal rate of return is used in the place of internal rate of return.
Real options valuations: Another important method for Capital budgeting is real option valuation which is often known as real option analysis. It is a type of options available to investors which open up with each possible capital investment. In case if certain risk factors arise they may be options to expand or options to cease. Since these options relate to tangible assets of the company which includes equipments and land rather that those which relates to intangible assets, they are often called real.
Equivalent annuity method: It is another polar approach to calculate the annual cash flow been generated by a project as of it was an annuity.
It is difficult for students to have a keen knowledge of all these methods without a proper guidance. In order to enhance knowledge of these methods it is required to do a systematic learning for which a proper guidance from experts is required.
Risk management and investment banking
Risk management in corporate finance has become essential in recent years. Thus risk management and investment banking are important part of corporate financing. Any kind of deviation from an expected outcome is known as risk in corporate financing. According to present day financial experts little bit of risk is desirable. Thus, short term risks are essential for long term investment. Risks an investor can take depend on the investor’s risk tolerance. It is calculated based on investor’s financial position, availability of capital etc. According to the new discipline of ‘risk management’ it advises investors by calculating risk through various financial methods and tells them how to manage risks.
An investment bank performs as an intermediary between the investing public and the security issuing company by acting as an agent or a broker.
Ways experts can help students with finance assignments.
Students of finance assignments need to know lots of things as well as needs to take many circumstances of the company’s financial state in order to prepare assignments. It gets difficult for students to have a keen knowledge of all the circumstances as well as methods needed to prepare assignments. Apart from it students also get less time for preparing their assignments due to their participation in other activities. Another reason why students do not get much time for assignments is that they also have to prepare for their examinations. Thus, it is always suggested to take a help from experts to complete assignments. Experts provide assistance to students in order to complete assignments. Students seeking assistance from experts scores better than other students as experts helps in completing assignments in good quality. Experts provide 24×7 assistance to students either on live chat or phone calls. Experts make sure that they provide assistance to students at reasonable and affordable cost. Thus experts help in completing assignments on time with their good knowledge about the subject.