Michael Taillard

Corporate finance is the study of how groups of people work together as a single organization to provide something of value to society. It’s the job of those in corporate finance to manage the organization so that resources are efficiently utilized, the most valuable projects are pursued, the corporation can remain competitive, and everyone gets to keep their job.

Corporate finance is the study of relationships between groups of people that quantifies the otherwise immeasurable. Take a look at the role of money in the world to understand how this definition makes any sense at all. According to Adam Smith, an 18th century economist, the use of money was preceded by a barter system.

The goal of regression is to look at past data to determine whether there are any variables that are influencing financial movements. This process now typically utilizes very advanced computer programs, such as analytics software and databases, to perform something called data mining. Basically, data mining works by including all the data you can possibly get your hands on and letting a computer program figure out whether any correlation exists between the thing you’re trying to forecast and other variables.

Derivatives are legal contracts that set the terms of a transaction that can be bought and sold as the current market price varies against the terms in the contract. Originally, derivatives were all about bringing price stability to products that can be quite volatile in their pricing over short periods of time.

The ratio of operating cash flows to current maturities utilizes the cash flows a company generates from its operations to determine its ability to pay any debts that are maturing within the next year. This ratio is different from the other liquidity metrics in this section in two important ways: It determines whether a company can pay debts by using the cash flows it generates rather than the assets it has on hand.

Corporate finance jobs aren’t just about crunching numbers all day in a hidden corner of a corporation’s financial department. A variety of employment opportunities are available within the corporate finance function, including the following: Entry-level positions: The entry-level positions in corporate finance are typically the same as the ones you see in accounting: Payroll: The people who make sure you (and the rest of your company) get paid Accounts receivables: The people who process incoming payments and money owed Accounts payables: The people who process outgoing payments and money owed to others Bookkeeping clerks and other forms of paperwork processing: People who work on data entry; think Charles Dickens’ character Bob Cratchit from A Christmas Carol Analysts: These people get to do a whole lot of research and analysis to derive useful information from data or otherwise yet unstudied scenarios.

Corporations are a special type of organization wherein the people who have ownership can transfer their shares of ownership to other individuals without having to legally reorganize the company. This transferring of shares is possible because the corporation is considered a separate legal entity from its owners, which isn’t the case for other forms of companies.