Need of Corporate Finance
Finance is the life blood of business. It is required past times all types of companies. It is required for starting a company. It is required for running a company. It is required for the survival, stability together with growth of a company. It is required for expansion together with diversification of a business. Finance is too required for closing downward the company.
So, a fellowship cannot endure without finance. It requires promotional finance to starting fourth dimension the company. It requires long-term finance to purchase fixed assets. It requires evolution finance for growth, expansion together with diversification of business.
Importance of Corporate Finance
The next points convey out the importance of corporate finance.
Image Credits © Sameer Akrani.
- Research together with Development : Corporate Finance is needed for Research together with Development. Today, a fellowship cannot endure without continuous inquiry together with development. The fellowship has to hold making changes inward its quondam products. It must too invent novel products. If not, it volition live instruct automatically thrown out of the market.
- Motivating Employees : Manager together with employees must live continuously motivated to amend their performance. They must live given fiscal incentives, such equally bonus, higher salaries, etc. They must too live given non-financial incentives such equally carry facilities, canteen facilities (eatery), etc. All this requires finance.
- Promoting a Company : Finance is needed for promoting (starting) a company. It is needed for preparing Project Report, Memorandum of Association, Articles of Association, Prospectus, etc. It is needed for purchasing Land together with Buildings, Plant together with Machinery together with other fixed assets. It is needed to purchase raw materials. It is too needed to pay wages, salaries together with other expenses. In short, nosotros cannot starting fourth dimension a fellowship without finance.
- Smooth Conduct of Business : Finance is needed for conducting the trouble organisation smoothly. It is needed equally working capital. It is needed for paying day-to-day expenses. It is needed for advertising, sales promotion, distribution, etc. Influenza A virus subtype H5N1 fellowship cannot run smoothly without finance.
- Expansion together with Diversification : Expansion way to increase the size of the company. Diversification way to create together with sell novel products. Modern machines together with modern techniques are needed for expansion together with diversification. Finance is needed for purchasing modern machines together with modem technology. So, finance becomes mandatory for expansion together with diversification of a company.
- Meeting Contingencies : The fellowship has to run across many contingencies. For e.g. Sudden autumn inward sales, loss due to natural calamity, loss due to courtroom case, loss due to strikes, etc. The fellowship needs finance to run across these contingencies.
- Government Agencies : There are many regime agencies such equally Income Tax authorities, Sales Tax authorities, Registrar of Companies, Excise authorities, etc. The fellowship has to pay taxes together with duties to these agencies. Finance is needed for paying these taxes together with duties.
- Divident together with Interest : The fellowship has to pay dividends to the shareholders. It has to pay involvement to the debenture holders, banks, etc. It too has to repay the loans. Finance is needed to pay dividends together with interest.
- Replacement of Assets : Plant together with Machinery are the primary assets of the company. They are used for producing goods together with services. However, afterwards to a greater extent than or less years, these assets boot the bucket quondam together with outdated. They accept to live replaced past times novel assets. Finance is needed for replacement of quondam assets. That is, finance is needed to purchase novel assets.
