Corporate Finance

AuthorBert Spector
ProfessionProfessor of Strategy at Northeastern University
Corporate Finance 1
Capital flows into and out of every corporation. Customers buy products
and services, bank s loan money, and investors purchase stocks and bonds.
All that occurs whi le the corporation keeps its daily operations going and
invests in future growth. Mak ing decisions about how to raise that capi-
tal and then spend, record, and report all resulting f inancial transactions
requires experts: fina ncial managers and acc ountants.
At the same time, it is difficult to imag ine any significant interaction
between corporate executives and legal counsel that does not touch upon some
equally signif icant financial tra nsaction. In these transactions, it is vital that
all sides have a clear understanding of one another. Just as attorneys have a
specialized voc abulary, financial ma nagers and accountants often seem to be
speaking their own lan guage. “Weighted average cost of capital,” “net present
value,” “retained earnings,” and “generally accepted accounting practices”
are just some of the many terms you are likely to run ac ross in your day-
to-day dealing s. This chapter provides an overview of the topic of corporate
finance designed to e ase transactions between financial experts and coun sel.
Managing Finances
How to raise capital and then spend it: these are the two matters that most
concern financia l managers. Let’s look at each one in turn.

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