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Introduction :
Business Banking" tends to work with small-to-medium sized enterprises (SMEs). Business banking does all the things that retail banking does but adds the following things: 1) More services. Business Banking includes things like more treasury services, revolving credit, merchant credit, cash management, group insurance, corporate cards and secure Internet banking (e.g. server-to-server). 2) Better rates. Since SMEs bring in more money, they tend to get better rates than the retail banking customer, who tends to need lots of maintenance compared to their deposit sizes.
Retail, SME and corporate banking customers use the same infrastructure, but the sales platforms tend to be different to cater to their specific needs.kk
Definition :
Should a proposed investment be made? How should the company pay for it; with equity or with debt, or combination of both? Should shareholders be offered dividends on their investment in the company?
How much finance is required by the company? What are the sources of finance? How to use the finance profitably?
Raising the finance : Raising (collects) finance for the company which can
be collected from many sources, viz., shares, debentures, banks, financial institutions, creditors, etc.
Investing the finance : There are two types of corporate finance, viz.,
fixed capital and working capital. Fixed capital is used to purchase fixed assets like land, buildings, machinery, etc. While working capital is used to purchase raw materials, to pay the day-to-day expenses like salaries, rent, taxes, electricity bills, etc.
Characteristics : 1
1 2 Investing the finance 3 Objective Oriented 4 Types of Finance 5 Relationships with other departments 6 Dynamic in nature 7 Requires Proper Planning and control Financial Activity
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9 Legal Requirements
Investing the finance : Corporate finance also includes investing (using) the
finance. The finance is used to achieve the objectives of the company. It is used to purchase fixed assets. It is also used for running the company.
To earn maximum profits, To give a proper dividend to the shareholders, and To create a proper reserve for future growth and expansion, etc.
Types of finance : There are two types of corporate Finance, viz., fixed
capital and working capital. Fixed capital is used to purchase fixed assets. Working capital is also called short-term finance. It is used to meet the shortterm needs of the company. It is used to pay the day-to-day expenses of the company.
by all types of companies. for starting a company. for running a company. for the survival, stability and growth of a company. for expansion and diversification of a business. for closing down the company.
So, a company cannot survive without finance. It requires promotional finance to start the company. It requires long-term finance to purchase fixed assets. It requires development finance for growth, expansion and diversification of business.
Motivating Employees
Promoting a Company Smooth conduct of Business Expansion and Diversification Meeting Contingencies Government Agencies Dividend and Interest Replacement of Assets
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8 9
Smooth Conduct of Business : Finance is needed for conducting the business smoothly. It is needed as working capital. It is needed for paying day-to-day expenses. It is needed for advertising, sales promotion, distribution, etc. A company cannot run smoothly without finance. Expansion and Diversification : Expansion means to increase the size of the company. Diversification means to produce and sell new products. Modern machines and modern techniques are needed for expansion and diversification. Finance is needed for purchasing modern machines and modem technology. So, finance becomes mandatory for expansion and diversification of a company. Meeting Contingencies : The company has to meet many contingencies. For e.g. Sudden fall in sales, loss due to natural calamity, loss due to court case, loss due to strikes, etc. The company needs finance to meet these contingencies.
Government Agencies : There are many government agencies such as Income Tax authorities, Sales Tax authorities, Registrar of Companies, Excise authorities, etc. The company has to pay taxes and duties to these agencies. Finance is needed for paying these taxes and duties. Dividend and Interest : The company has to pay dividends to the shareholders. It has to pay interest to the debenture holders, banks, etc. It also has to repay the loans. Finance is needed to pay dividends and interest. Replacement of Assets : Plant and Machinery are the main assets of the company. They are used for producing goods and services. However, after some years, these assets become old and outdated. They have to be replaced by new assets. Finance is needed for replacement of old assets. That is, finance is needed to buy new assets.
Environmental and social issues may threaten the financial and operational viability of a commercial operation. A corporate transaction exposes a financial institution to the entire commercial operation of the investee company, which presents a liability, reputational, and credit risk.
Stand-alone risk
Corporate risk Market risk
1.Stand-Alone Risk
This risk assumes the project a company intends to pursue is a single asset that is separate from the company's other assets. It is measured by the variability of the single project alone. Stand-alone risk does not take into account how the risk of a single asset will affect the overall corporate risk.
2.Corporate Risk
This risk assumes the project a company intends to pursue is not a single asset but incorporated with a company's other assets. As such, the risk of a project could be diversified away by the company's other assets. It is measured by the potential impact a project may have on the company's earnings.
3.Market Risk
This looks at the risk of a project through the eyes of the stockholder. It looks at the project not only from a company's perspective, but from the stockholder's overall portfolio. It is measured by the effect the project may have on the company's beta.