Archive for May, 2010
Corporate Finance
The field of corporate finance deals with the decisions of finance taken by corporations along with the analysis and the tools required for taking such decisions. The principle aim of corporate finance is enhancing the corporate value and at the same time reducing the financial risks of the company. In addition to this, corporate finance also deals in getting the maximum returns on the invested capital of the company. The major concepts of corporate finance are applied to the problems of finance encountered by all type of firms.
The discipline of corporate finance can be split into the short term and the long term techniques of decisions. The investments of capital are the long term decisions relating to the projects and the methods required to finance them. On the other hand, the capital management for working is considered as a short term decision that deals with the short term current liabilities and asset balance. The main focus here rests on the management of inventories, cash and, the lending and borrowing on a short term basis.
Corporate finance is also associated with the field of investment banking. Here, the role of the investment banker is the evaluation of the various projects coming to the bank and making proper investment decisions regarding them.
The Capital Structure:
A proper finance structure is required for achieving the set goals of corporate finance. The management has to therefore design a proper structure that has an optimal mix of the different finance options that are available.
Generally, the sources of finance will comprise of a mix of equity as well as debt. If a project is financed through debt, it results in causing a liability to the concerned company. Hence in such cases, the flow of cash has various implications regardless of the success of the project. The financing done by equity carries a lower risk regarding the commitments of the flow of cash, but the result of this is the dilution of the earnings and the ownership. The cost involved in equity finance is also higher in the case of debt finance. Hence, it is understood that the finance done through equity, offsets the reduction in the risk of cash flow. The management has to hence have a mix of both the options.
The Decisions of Capital Investments:
The decisions of capital investments are the long term decisions of corporate finance that are related to the capital structure and the fixed assets. These decisions are based of several criteria that are inter-related. The management of corporate finance attempts to maximize the firm’s value by making investments in the projects that have a positive yield. The finance options for such projects have to be done in a proper manner.
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Financing is financing, right? A loan for a business is just like a loan for a home, right? Unfortunately, this simply isn’t the case. Commercial financing is an entirely different game compared to personal financing.
Sooner or later, you are going to need financing as a business. It might be to get up and started. It might be to finance materials needed to fulfill a large order. Whatever the reason, it is vital to understand that there are two basic forms of commercial finance for businesses – debt financing and equity financing.
Equity financing is the most common choice of newer businesses. Why? Well, the statistics are fairly ugly. Something between 70 and 90 percent of all new business fail within two calendar years from the date of launch. As a result, traditional commercial banks are loath to invest in newer companies. The risk is just to big that a default will occur.
So, what exactly is financing and who does it? Well, equity financing is not really financing at all. It is the sale of pieces of ownership in the business to drum up money. For most small businesses, this means tapping into the bank of Mom & Dad as well as lightly twisting the arms of friends. For businesses with bigger ideas, angel investors or venture capitalists can also be sources of funding. The primary issue to keep in mind, however, is once that equity is sold off, the business is no longer “yours”. It is owned by a group and a group that wants to make a profit.
Debt financing for a business is much more like personal financing. You are usually dealing with a bank. Assuming your company has been around for a bit, the bank will be receptive to chatting with you about your financing needs. That being said, it is not going to give you a general loan. Commercial debt financing usually is tailored to a specific need. If my business needs to buy a piece of equipment, the lender will give me a loan for that specific piece of equipment.
There is one area where commercial banks will provide more general financing to small businesses. This is in the form of a line of credit. These lines can be a blessing and a course. First, they are expensive. Second, they tend to be watched closely by the bank. You might have a million dollar credit line, but you will rarely get to use it all. If the bank sees your balance going up towards the limit, it will often call the line. This means it will essentially demand payment within a specified time. If you do not make it, the bank will come after your assets since it required you to personally guarantee the line. This is something you see happen with service companies, such as law firms, all of the time.
So, which form of financing is better for your business? If you can swing it, debt financing is by far the best. Giving up ownership interests in your company should be avoided, which makes equity financing a Faustian bargain.
Stephen Teak writes about financing through commercial loans for small and big businesses alike. Read more of his work at CommercialLoanStop.com.
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Pet friendly vacations and travel planning make sense — after all, pets are family members too! In the United States alone, over 60 million households have one or more pets. Pet owners in 15 million of those households travel with their pet, and the majority stay in pet friendly lodging. Fortunately, pet friendly hotels, condos and vacation home rentals do exist. If you will be planning pet friendly vacations, here are some tips for safe and trouble-free travel.
1 – When you make your reservation, double-check that pets are allowed. An important advantage of reserving online is that you can see in writing whether or not pets are permitted and any restrictions. Online, you can print out your reservation receipt that includes the “pets allowed” information. Verbal reservations leave more room for misunderstanding and miscommunication. If reserving by telephone, ask the reservation person to mail you a confirmation receipt that includes the “pets allowed” information.
2 – Is your pet an experienced traveler? If not, you should begin getting your pet more accustomed to traveling so that pet friendly vacations won’t be something new. Begin by making your car a fun place for your pet. Get in the car with them, play with them, give them a treat — have them enjoy being there with you. Then take a short drive with them. Gradually increase the length of time and distance that you drive with them. Before making a long trip with your pet, the idea is to have them comfortable with being in the car for extended periods of time.
3 – Remember that securing your pet while traveling in the car is crucial for their safety and yours. Consider purchasing a dog safety harness for your pet to use while traveling in the car. If you have a station wagon or SUV, you can purchase a vehicle barrier that keeps your pet confined to the rear area. They are usually sold at pet stores or are available online.
4 – Pet friendly vacations planning should include taking steps to ensure your pet can be found if it accidentally becomes lost while on vacation. Be sure that your pet has an identification tag and wears it while on the trip. The tag should have your pet’s name, your name and phone number. If possible, use your cell phone number, a home number and the number of where you will be staying.
5 – Carry a photograph of your pet with you on your trip. If your pet should ever become lost, you’ll be able to show others exactly what your pet looks like instead of just relying on a verbal description.
6 – Check with your vet for any recommended vaccinations appropriate for your trip — exposure to ticks while hiking, exposure to other dogs while being boarded or heartworm prevention if your dog will be exposed to mosquitoes are examples of important preventative measures to take before your trip. If your pet is a dog, have an up-to-date rabies tag for your dog’s collar. If you decide to day board your dog while taking pet friendly vacations, you may be required to show paperwork proof of the rabies vaccination.
7 – Once you arrive at the pet friendly lodging, inform the check-in person that you have your pet. You can inquire if there are any restricted areas where your pet should not be taken. Pet friendly lodging staff should be very accustomed to answering these kinds of questions and will appreciate your awareness.
8 – In your hotel room, condo, cabin rental or vacation home rental — never let your pet use the furniture or beds to sit, lay or sleep on unless you’ve covered the furniture or bed with your own cover. Place your pet’s food and water containers on a mat or newspaper in the bathroom, where cleanup will be easier. When staying in pet friendly accommodations, you may even choose to feed your pet outdoors.
9 – If you’ll be leaving your pet alone in the room or vacation rental, make sure the front desk or rental agent knows. Be sure that you leave your pet secured in their travel container or crate if housekeeping staff will be entering the room at any time to clean. You certainly don’t want a housekeeper to enter and be surprised or even attacked by your pet! A pet may also run out of the room when housekeeping enters if left unsecured.
10 – Be very careful while taking pet friendly vacations in warm or hot weather. Leaving your pet in the car can be deadly. Even when the outside temperature is only in the 70′s or 80′s, the interior of a vehicle can reach 100 degrees and higher, especially when parked in the sun. It doesn’t take long at these temperatures to cause serious or even fatal harm to your pet.
Traveling with pets and staying in pet friendly lodging can be lots of fun — after all, your pet is part of your family too. Just using common sense and planning ahead makes for enjoyable and surprise-free pet friendly vacations.
Copyright 2005 InfoSearch Publishing
David Buster is VP of InfoSearch Publishing and webmaster of http://www.bestvacationrentalsonline.com – visit the website to find pet friendly vacations lodging worldwide, log cabin rentals, vacation home rentals, places to get married, discount hotel rooms, adventure travel and more.
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Finance – More Than Number Crunchers
If you were to dissect the culture of a business, and you ask various people in an organization what the real roles of each department are, you’ll find the well-known dichotomy between “front office” and “back office” operations.
Front office staff are the people who deal with customers. They might be the customer service department, the sales department, and sometimes the marketing department (depending on how involved the marketing department is in the sales cycle). Back office staff are usually the admin assistants, HR, and the killjoy of all businesses – the Finance department.
In businesses I’ve observed, Finance departments often face silent derision or disrespect. Part of it is an us-versus-them mentality that comes out of the front office staff who feel their jobs are more difficult because they deal with customers (compared to Finance, who deal with numbers). And no one from the front office sends memos to the back office saying “please spend less time crunching the numbers” but it can feel like the back office is constantly memo-ing the front office with “watch this expenditure” or “spend less on client lunches”.
Unfortunately, this view is supported by management at all levels that give Finance the nasty job of accounts receivable, the inputting-heavy job of accounts payable, and the dull job of budget forecasting. Compared to the highly creative marketing department and the edge-of-the-seat, in-the-trenches feeling of the sales department, finance is like the broccoli side dish on a plate of steak and fries.
But it doesn’t have to be this way! Finance departments shouldn’t be relegated to the back office in the hopes that their sharp pencils won’t poke a customer in the eye! Finance departments can and should play a far more important role in the organization. Here are some ideas:
- POSSIBILITY 1: Finance should be more about business strategy than number prophecy. When the Finance department hounds the sales managers to get in their budgets and then turns them around for a final target budget for the year, their role is reduced to mere numerical interpreter. But what if Finance sat down with sales and talked to them about how their numbers connected to expected outcomes? And then, what if Finance sat down with the executives of the company and actually worked out a forecast that was tied to what the market was anticipating! Imagine a world where Finance’s numbers were more than just a spreadsheet that gets pulled out at every quarterly review.
- POSSIBILITY 2: Finance should be more about opportunity. Many sales managers have some limited view into which customers are sending business. But the view isn’t always perfect. Or complete. Finance should get involved to show how a customer is really impacting the business’ bottom line. If Finance and Sales talked to each other, Sales might be shocked to discover that their biggest client is actually less valuable than expected because of the amount of work involved in keeping them as clients, or they might discover that a seemingly profitable client isn’t profitable at all because their receivables get very, very old. Imagine a world where the Finance department can relate true business impacting information to Sales to tell them which opportunities are truly the most profitable.
- POSSIBILITY 3: Finance should be selling, too. When Finance gets the job of following up on accounts receivables, they can potentially do more harm than good. Finance people are highly skilled at numbers, and they might be good “people-oriented” staff, but they are rarely trained in the art of sales. However, when a Finance person, tasked with accounts receivables, gets adequate training in receivables AND customer service AND sales, their success rate at getting the receivables paid can increase, but so will their success rate at winning more business.
There are so many more opportunities, too. Businesses should be using their accounts payable list as a prospecting list. They should be temporarily swapping roles between Finance and Sales for brief “see-how-the-other-side-does-it” days to enable new appreciation and new connections. Finance should sit in on sales calls to see why Sales sometimes feels like they need to bend the rules to close the deal (and Sales should shadow the work of Finance so they know what work needs to happen at the back-end if they don’t assess risk adequately during the sale).
The bottom line for businesses should not be derived from a cloistered Finance department. Instead, a business can uncover new and exciting opportunities when it makes its Finance department an integral part of the entire business.
Heather Villa, MBA CMA MSM, is a Business Coach and Entrepreneur. She helps business owners achieve success in operations, productivity, project management, and social media. Read her other articles at http://hireheathervilla.com/resources/articles/ and visit http://heathervilla.com for more information.
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Accounting and Finance Schools Prepare Business Leaders
Accounting and finance schools are in the business of preparing leaders in financial accounting, from office administrators to professors at business colleges. Those with advanced skills in finance and accounting will have exceptional employment opportunities with major businesses, government agencies, schools, banks, tax services, and more. You can learn to be an accountant in two to four years from some of the best schools for accounting and finance.
When we think of accountants, we might think of those who simply audit financial accounts for various businesses, but there is a bit more to it than that. Those with even a few months of training in accounting and finance will have expertise that encompass much more than financial bookkeeping. Accounting and finance schools will impart in-depth education in finance and accounting that can include such skills as financial management, planning and executing financial ventures, analyzing investment schemes, understanding accounting technology, developing financial initiatives, and other important skills.
Some of the classes you can anticipate from a typical accounting and finance course would include preparing balance sheets, statements, journals, and ledgers; computation, classification, and verification of financial accounts; and accounting technology and software. Accounting and finance schools may also include instruction on banking, inventory management, cash flow and debt, business and personal tax preparation, payroll, accounts payable, accounts receivable; and much, much more.
The level of accounting and finance training that you should strive for depends on the position you will seek upon graduation. There are several levels of college degrees in finance and accounting, as well as certificates and diplomas. You can gain an entry-level education in accounting and finance with a certificate or diploma, but advanced positions will require at least an Associate of Science degree (AS). Naturally, employment and salary improvements will move up incrementally with associate and bachelor degrees in accounting and finance.
If you plan to go into teaching, or if you would like to become an expert in one specific area of business administration (such as e-commerce, education, estate planning, personal finance, insurance, investments, employee benefits, or income tax, for instance), you should seek a graduate degree from a good business school. Advanced degrees in accounting and finance would be the Master of Business Administration (MBA) and the Doctorate of Business Administration (DBA). However, if you just want to brush up on your finance and accounting skills, you will be pleased to know that many vocational accounting and finance schools are willing to provide professional certificate studies in accounting and finance.
So, if you think you would enjoy keeping track of other people’s money and working in high finance, a course in finance and accounting might be just right for you. The best part is you can anticipate lifelong employment and an excellent salary range. Ready to start now? Find Accounting and Finance Schools on our website and submit a request for more information today.
DISCLAIMER: Above is a GENERAL OVERVIEW and may or may not reflect specific practices, courses and/or services associated with ANY ONE particular school(s) that is or is not advertised on SchoolsGalore.com.
Copyright 2007 – All rights reserved by Media Positive Communications, Inc.
Notice: Publishers are free to use this article on an ezine or website, provided the article is reprinted in its entirety, including copyright and disclaimer, and ALL links remain intact and active.
Michael Bustamante is a staff writer for Media Positive Communications, Inc. Find out how you can Learn Accounting and Finance and find Accounting and Finance Schools, Colleges, Universities, and Vocational Schools at SchoolsGalore.com, your resource for higher education.
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