Education and Career Forum

What is meaning by corporate finance policy? State the various sources of finance? I just wanted to understand this as it's required for me in the current employment. Can someone please provide me the complete information on the same as soon as possible? Thanks!

In each and every business, definitely some critical business decisions should be taken for the success of firm or for the profitability purpose. Such kind of decisions may have financial implications and also involves the use of money. Managing of all such decisions will be treated as Corporate Finance and the policy that is governing these aspects is called as Corporate Finance Policy.

How effectively the company can finance its debt obligations will be dependent upon Corporate Finance Policy.

Having a strong Corporate Finance Policy, the company can easily borrow the money from different different sources to manage its day to day operations and for the long term growth of the organization.

Here are sources of Finance :
1) Internal Sources
2) External Sources

Examples for Internal Sources of Finance are
-Personal Capital
-Family and Friends
-Working Capital or Retained Profits

The company can use the investment amount or will borrow money from the family or friends. If necessary, Retained profits will also be used as a source of finance if the company is not willing to go for other external sources.

Examples for External Sources of Finance are
-Debt Finance
-Equity Finance

Debit Finance is by issuing bonds and Equity Finance is by issuing shares to the public.

Investors would get profit if the share price is increased.