Outline of corporate finance

The following outline is provided as an overview of and topical guide to corporate finance:

Corporate finance is the area of finance that deals with the sources of funding, and the capital structure of corporations, the actions that managers take to increase the value of the firm to the shareholders, and the tools and analysis used to allocate financial resources.

For finance in general, see Outline of finance.

Overview

Critical accounting policy – Accounting involving significant judgment and materially affecting financial statements
Gross margin – Gross profit as a percentage
Stakeholder (corporate) – Member of groups without whose support the organization would cease to exist
Yield (finance) – Income return on an investment expressed as a percentage of its value
- Inverted yield curve – Phenomenon when shorter term bonds yield higher interest rates than longer term bonds

Aspects

Corporate action – Event initiated by a public company
Corporate capitalism – Capitalism dominated by large corporations
Corporate donations – Voluntary donations made by companies
Corporate responsibility – Business concept
Corporate sustainability – Business strategy that focuses on sustainability as a core aspect of the business
Corporate tax – Tax on corporations
- Franchise tax – Levied by some US states on certain businesses
Corporate taxonomy – Organization of a company's functions or data into categories
Corporate trust – Trust arrangement in which a corporation acts as trustee for assets or obligations

Concepts

Arbitrage – Capitalisation of risk-free opportunities in financial markets
Beta (finance) – Expected change in price of a stock relative to the whole market
Earnings at risk – Estimate of the potential impact of market movements on a firm's earnings
Financial engineering – Application of mathematical and computational practices in finance
Fundamental analysis – Analysis of a business's financial statements, health, and market
Going concern – Term for a functioning business
Scenario analysis – Futures studies / Futures techniques method
Short-rate model – Interest-rate model describing the stochastic evolution of the instantaneous short rate
Spread trade – Type of financial purchase on securities

Models

Bayes' theorem – Mathematical rule for inverting probabilities
Black-Scholes model – Mathematical model of financial markets
Dividend discount model – Valuation model that prices a stock by discounting expected future dividends
Generalized gaussian distribution – Probability distribution
Linear algebra – Branch of mathematics
Marginal utility – Benefit derived from consuming a product
Money flow index – Measurement of stock markets
Stock market index – Financial metric which investors use to determine market performance

Strategy

Asset stripping – Selling assets for the sake of equity investors
Diversification (marketing strategy) – Expansion to new products, services, or markets
Embedded option – Contract feature giving the holder option-like rights within a host financial instrument
- Option-adjusted spread – Type of yield spread
Management buy-in – Of a large interest in a company
Public offering without listing – Form of public equity offering by non-Japanese firms
Rebalancing investments – Portfolio rebalancing in finance

Operations

Corporate budget – Balance sheet or statement of estimated receipts and expenditures
Captive insurance – Insurance company created and owned by a firm to insure its own risks
Cost of equity – Required return compensating shareholders for the risk of investing in a company's equity
Financial management – Management of money in such a manner as to accomplish the objectives of organization
- Capital management – Management of capital assets and investments
- Consignment – Selling of one's personal property through a third-party vendor
Flag of convenience^[1]
FP&A – Accounting and business support structure
- Corporate finance analyst – Framework for corporate funding, capital structure, and investments
Operational due diligence (alternative investments) – Assessing non-investment risk and operational soundness of alternative investment managers

Ratios

Capitalization rate – Real estate valuation measure
Effective interest rate – Precisely defined interest rate
Incremental capital-output ratio – Ratio of how much additional investment is needed to generate one unit of extra output
Loan-to-value ratio – Ratio comparing the size of a loan to the value of the asset securing it
Operating ratio – Operating expenses as percent of revenue
P/B ratio – Financial ratio comparing stock price to company book value

Capital

Abnormal return – Difference between an investment's actual and expected returns
Capital budgeting – How an organization allocates its cash and resources
- Accounting rate of return – Financial ratio
- Internal rate of return – Method of calculating an investment's rate of return
Capital structure – Mix of funds used to start and sustain a business
Cost of capital – Cost of a company's funds
Fixed capital – Long-lived physical assets used repeatedly in production
Liquid capital – Financial resources readily available for use, typically in cash or near-cash form
- Money – Object or record accepted as payment
Venture capital – Form of private-equity financing
Working capital – Difference between a firm's assets and liabilities used to fund day-to-day operations

Entities

Benefit corporation – Type of for-profit entity
Flow-through entity – Business entity which is transparent for tax purposes
Limited Liability Partnership – Partnership in which some or all partners have limited liabilities
Offshore company – Company or corporate entity established in an offshore jurisdiction
Shell corporation – Company with few, if any, actual assets or operations
Yield co – Company formed to own operating assets and distribute stable cash flows to investors

Assets

Accounts receivable – Claims for payment held by a business
- Receivables turnover ratio – Measure of how efficiently a firm collects credit sales from customers
Capital asset – Property of any kind held by an assessee
Complementary assets – Resources that enhance the value or usability of another asset when used together
Factoring (finance) – Financial transaction and a type of debtor finance
Fixed asset – Assets and property that cannot easily be converted into cash
- Accelerated depreciation – Accounting method
- Fixed assets management – Accounting process
  - Fixed asset register
Intangible asset – Concept in accounting and economics
- Goodwill (accounting) – Intangible asset recognized in the acquisition of a firm
- Intellectual property – Ownership of creative expressions and processes
- Patent – Type of legal protection for an invention

Liabilities

Accounts payable – Money owed by business to its suppliers
Credit – Financial term for the trust between parties in transactions with a deferred payment

Loans

Back-to-back loan – Loan agreement between entities in two countries
Business loan – Loan intended for business purposes
Bond (finance) – Instrument of indebtedness
Equated monthly installment – Loan repayment variant
In-house lending – Type of seller financing
Loan covenant – Condition in a commercial loan or bond agreement
- Cov-lite – Loan agreements without protective covenants for the lending party
Shareholder loan – Debt-like form of financing

Development

Business valuation – Determination of the economic value of a business^[2]
- Net present value – Valuation in finance
- Sum-of-the-parts analysis – Method of valuation of a company
Buyout – Investment transaction by which the ownership equity of a company is acquired
Dividend – Payment made by a corporation to its shareholders
- Common stock dividend – Dividend paid to holders of a company's common shares
- Dividend reinvestment plan – Equity investment option
- Dividend policy – Policies in finance
Leverage (finance) – Use of borrowed funds in the purchase of an asset
Mergers and acquisitions – Processes through which companies combine or transfer ownership
- Consolidation (business) – Merger and acquisition of many smaller companies into much larger ones
Research and development – General term for activities in connection with corporate or governmental innovation

Liquidations

Anti-deprivation rule – Legal principle in common law
Liquidation – Financial process by which a company is ended
- General assignment – Concept in bankruptcy law
Qualifying floating charge – Security interest over a fund of changing assets of a legal entity

Subtypes

Carbon finance – Type of investment in the context of climate actionPages displaying short descriptions of redirect targets
- Carbon accounting – Processes used to measure emissions of carbon dioxide equivalents
Commercial finance – Function of offering loans to businesses
Social finance – Mobilising capital for projects with social or environmental goals
Structured finance – Sector of finance that manages leverage and risk
Supply chain finance – Financing methods that optimize cash flow across buyer–supplier relationships

Investment

Active management – Investment approach where managers actively select and adjust portfolio holdings
Clientele effect – Investor shifts caused by policy changes that attract different investor groups
Disclosed fees – Price to be paid for remuneration for services
Immunization (finance) – Strategy to minimize effects of changes in interest rates
Income trust – Vehicle that holds income-generating assets and distributes earnings to unitholders
Lead arranger – Bank coordinating a syndicated loan
Liquid alternative investment – Strategy offering hedge-fund-like exposures through liquid, publicly tradable vehicles
Portfolio (finance) – Financial term for a collection of investments
- Portfolio optimization – Process of selecting a portfolio
Projects – Assignment planned to achieve a objective
Real options valuation – Capital budgeting analysis term
Return (finance) – Finance term; profit on an investment

Funds

Interest – Sum paid for the use of money
- Interest rate – Percentage of a sum of money charged for its use
Investment fund – Way of investing money alongside other investors
Mutual fund – Professionally managed investment fund
Stock fund – Investment fund for the asset of stocks

Shares

Common stock – Form of corporate equity ownership
- Differential voting right shares – Shares with unequal voting rights
Earnings per share – Value of earnings per outstanding share of common stock for a company
- Earnings call – Meeting revealing a public company's finances
Golden share – Special type of company share
High-yield stock – Stock offering above-average dividend yield
Issued shares – Shares of a corporation owned by shareholders
- Equity issuance – Sale of new shares to raise capital
Leading stock – Stock outperforming the broader market
Monthly income preferred stock – Type of stock senior to common stock
Non-voting stock – Stock that provides the shareholder very little or no vote on corporate matters
Participating preferred stock – Preferred shares with extra profit participation
Preferred stock – Type of stock senior to common stock
Registered share – Share recorded in the owner's name
Secondary shares – Existing shares sold by current holders
Stock exchange – Organization that provides services for stock brokers and traders to trade securities

Theory

Fisher separation theorem – Firm"s investment decision is independent of its owners' consumption preferences
Modigliani–Miller theorem – Economic theory about capital structure
Theory of the firm – Theories relating to firms' roles in the economy
The Theory of Investment Value – American economist
Agency theory – Conflict of interest when one agent makes decisions on another's behalfPages displaying short descriptions of redirect targets
- Agency costs – Costs arising from conflicts of interest between principals and their agents
- Contract theory – Economic analysis of contracts
Capital structure – Mix of funds used to start and sustain a business
- Corporate finance § Capitalization structure
- Capital structure substitution theory – Theory proposing that managers adjust capital structure to maximize earnings per share
- Pecking order theory – Theory that firms prefer internal funds, then debt, and use equity last
- Market timing hypothesis – Hypothesis that firms adjust financing decisions to exploit favourable market conditions
- Trade-off theory of capital structure – Firms balance tax benefits of debt against financial distress costs when choosing leverage
- Merton model – Model that values credit risk using option-based default mechanics
- Tax shield – Reduction in taxable income achieved through allowable deductible expenses
Dividend policy – Policies in finance
- Corporate finance § Dividend policy
- Walter model – Policies in finance
- Gordon model – Valuation model that prices a stock by discounting expected future dividends
- Lintner model – American economist (1916–1983)
- Residuals theory – Policies in finance
- Signaling hypothesis – Policies in finance
- Clientele effect – Investor shifts caused by policy changes that attract different investor groups
- Dividend puzzle – Why firms pay dividends despite theories predicting investor indifference
- Treasury stock § Buying back shares
- Dividend tax – Tax levied on stock earnings
Capital budgeting – How an organization allocates its cash and resources
- Corporate finance § Investment and project valuation
- Clean surplus accounting – Valuing firms by changes in book value excluding shareholder transactions
- Residual income valuation – Equity valuation method based on the present value of future residual income
- Economic value added – Value of a firm's profit after deduction of capital costs
- Market value added – Measure comparing a firm's market value with the capital invested in it
- T-model – Connects fundamentals with investment return
- Adjusted present value – Valuation separating financing effects
- Uncertainty
  - Penalized present value – Method of budgeting where an investment's value is penalized according to its risk
  - Expected commercial value – Prospect-weighted valuation method for assessing uncertain project outcomes
  - Risk-adjusted net present value – Valuation method adjusting net present value for project-specific risk
  - Contingent claim valuation – Derivative whose payoff depends on an underlying asset or uncertain future event
  - Real options – Capital budgeting analysis term
  - Monte Carlo methods – Probabilistic measurement methods
Risk management
- Corporate finance § Financial risk management
- Financial risk management § Corporate finance
- Hedging irrelevance proposition – Protecting economic value by managing risk exposure
- Risk modeling – Modelling financial risks
- Risk-adjusted return on capital – Profitability measurement framework

Related lists

References

^ Bernaert, Andy (2006). Bernaerts' Guide to the 1982 United Nations Convention on the Law of the Sea. Victoria, B.C., Canada: Trafford Publishing. ISBN 978-1-4120-7665-4.
^ Kwok, Benny K. B. (2008). Forensic Accountancy (2nd ed.). LexisNexis. ISBN 978-962-8972-76-0.

External links

Corporate Finance Overview, Corporate Finance Institute

[1] Bernaert, Andy (2006). Bernaerts' Guide to the 1982 United Nations Convention on the Law of the Sea. Victoria, B.C., Canada: Trafford Publishing. ISBN 978-1-4120-7665-4.

[2] Kwok, Benny K. B. (2008). Forensic Accountancy (2nd ed.). LexisNexis. ISBN 978-962-8972-76-0.

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