Corporate Finance Financial Terms & Definitions

25 terms in this topic

Corporate finance encompasses the financial activities and strategies that corporations use to raise capital, make investments, and manage their financial resources. It includes key concepts such as capital budgeting, cost of capital, dividend policy, and mergers and acquisitions. The goal is to optimize the firm’s financial performance and long-term value.

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Beta

Beta (β) is a measure of a stock’s volatility relative to the overall market. It is a key concept in…

Full Definition
Beta Beta (β) is a measure of a stock’s volatility relative to the overall market. It is a key… Capital budgeting Capital budgeting is the process that companies use to evaluate and decide which long-term investments or projects to… Capital structure Capital structure is the specific mix of debt and equity that a company uses to finance its overall… CAPM (Capital Asset Pricing Model) The Capital Asset Pricing Model (CAPM) is a financial model that describes the relationship between systematic risk and… Cost of debt The cost of debt is the effective interest rate a company pays on its borrowed funds, such as… Cost of equity The cost of equity is the rate of return that a company must offer to investors to compensate… Debt financing Debt financing is a method businesses use to raise money by borrowing funds from lenders, with a promise… Discounted cash flow (DCF) Discounted Cash Flow (DCF) is a valuation method used to estimate the value of an investment, company, or… Dividend policy Dividend policy refers to the set of guidelines and strategies that a company’s management uses to decide how… Equity financing Equity financing is a method of raising capital for a company by selling ownership shares, known as equity,… Free cash flow (FCF) Free cash flow (FCF) is the cash a company generates after spending the money required to maintain or… Hurdle rate The hurdle rate is the minimum acceptable rate of return on an investment or project that a company…