Corporate finance is creating and allocating the necessary financial sources to ensure the value creation of the enterprise thus creating the process of a sustainable enterprise financing.
Financing strategy must be adjusted to
corporate strategy and should serve both the corporate mission and vision.
A successful corporate finance adapts to
the life course of the company, based on this there are multiple options available.
At the start of the enterprise costs incurred are necessarily exceed income which compared to the foundation in time will be realized with a delay in most cases. In this phase corporate finance is a risky investment which (as in every phase) can happen from internal or external sources.
Capital increase in every phase is a viable financing option. When using external sources a business angel may arise who despite the high risks would make the missing sources available.
After the initial losses in the phase of earning profit a positive outcome can be expected, financing risks decrease significantly.
Bank loans, expanding holders and risk capita become a financing option.
After the increase in market share and brand awareness and the increase in efficiency based on empirical experiences profit rate can go through a fast (exponential) increase in this phase.
Stock market listing can be an option in this phase as a financing option, now the need of external sources become significantly lower than in the first two phases.
Growth slowes down in the mature phase, the enterprise is still profitable but the growth is nowhere near as large as it was before. Arising financial needs can be satisfied with capital increase, bank loans or equity issuance.
The aforementioned phases show and ideal path for an enterprise, in many cases a company only achieves a few phases and then turns into decline.
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