By going through these Maharashtra State Board Secretarial Practice 12th Commerce Notes Chapter 1 Introduction To Corporate Finance students can recall all the concepts quickly.
Maharashtra State Board Class 12 Secretarial Practice Notes Chapter 1 Introduction To Corporate Finance
→ The term finance is related to money and money management
→ Finance = Inflow of Money + Outflow of Money
→ Corporate finance deals with the raising and using of finance by a corporation.
It also includes:
- Financial Planning
- Study of capital market, money market and share market
- Capital Formation
- Foreign capital
→ Corporate Finance is based on two decisions:
- Financing Decision
- Investment Decision
→ Capital Requirement is the funds required to start or run the business. Following points are to be taken into consideration:
- Draft a financial plan
- Volume of capital required
Capital Required :
- Fixed Capital
- Working Capital
Fixed Capital:
- Investment in fixed assets
- Used for longer period of time
Working Capital
- Day-to-day transactions
- Used for short period of time
→ Capital Structure is the mix of securities
Owned Capital + Borrowed Capital = Capital Structure
→ Capital Structure is the mix of securities
Owned Capital + Borrowed Capital Capital Structure
→ Capital Structure is composed of:
(a) Owned Funds = Share Capital + Free Reserves and Surplus
(b) Borrowed Funds = Debentures + Bank Loan + Long Term Loan