The concept of corporate finance

By Olala Updated: 06 Mar, 2019
Corporate finance is a stage in the financial system of a market economy, an objective economic category associated with the advent of the monetary commodity economy, the nature and level of development of Corporate finance also depends on the nature and pace of development of the commodity economy.
The concept of corporate finance

Corporate finance is a part of the financial system. Corporate finance is a system of economic relations in the form of value that arises in the process of creating and distributing financial resources and monetary funds, the process of creating and circulating corporate capital to serve service purpose production to achieve the common goal of that business. Characteristics of corporate finance: - Activities of corporate finance are always associated with and serve the production and business activities of enterprises. - The operation of corporate finance is dominated by capital ownership in each enterprise. - Operation of corporate finance is always dominated by profit targets.
Corporate finance has the following roles:
An enterprise is a profitable business organization that is recognized by law, is allowed to do business in certain areas, with one owner or more and the owner must ensure before the law by All of their properties, with their own names, have stable transaction offices.
- Financial relations between enterprises and employees in enterprises: salary payment, material rewards and penalties.
- Financial relations arise in corporate social activities such as funding for social organizations, charity funds, physical training, sports, culture ...
- The relationship between the parts of the enterprise such as payment among the departments in the enterprise, distribution of after-tax profits of the enterprise, establishment and use of the enterprise's fund.
- Financial relations between enterprises and foreign enterprises such as joint ventures with foreign enterprises operating in Vietnam, payment of import and export of goods and services ...
In the market economy, types of enterprises develop in a diversified and rich way. There are many business approaches. In terms of capital supply and demand perspective in the economy, enterprises are divided into financial and business financial enterprises and non-financial enterprises that trade in normal goods and services.
From the above financial relations, it can be concluded that corporate finance in terms of material content is a monetary fund in an enterprise created and used for business purposes of enterprises, in fact, these are economic relations between businesses and social and domestic economic entities. From there, it is possible to generalize business finance.