Key Terms to Corporate Finance
1. Corporate Finance
Corporate finance is the study of how companies raise capital to fund their operations and growth. Companies need money to operate, and they get it by selling shares to investors. Investors want to make sure that they are getting a good return on their investment. There are many different ways that companies can raise capital. Want to learn more about corporate finance?
2. Stock Market
The stock market is where companies sell their shares to investors. A company might decide to go public (go public) by listing its shares on a stock exchange. If a company does not list its shares, then it cannot trade hands. An IPO is a type of initial public offering.
Debt financing is when a company borrows money from banks and other financial institutions. These loans are called debt instruments. Companies use debt financing to expand their business, buy equipment, and hire employees.
Mergers and acquisitions are two terms for when two companies combine together. When two companies merge, they create a new company. When one company buys out another, the buyer becomes the owner of the acquired company.
5. Capital Markets
Capital markets are places where people invest money. People may put their money into stocks, bonds, mutual funds, real estate, commodities, art, antiques, collectibles, or any other kind of asset.
Financial statements show what a company owns, what it owes, and what it earns. A balance sheet shows a company’s assets, liabilities, and equity at a specific point in time. A statement of cash flows shows how much a company makes and spends over a period of time.
7. Interest Rate
Interest rate is the price of borrowing money. It is the cost paid to someone who lends you money. The interest rate is often expressed as a percentage per year.
Want to learn more about corporate finance? We can help you with that