All these important concepts of corporate finance are used to minimize the financial risks to which the corporate sector is exposed. At the same time, these concepts are used to increase the profitability of the corporations. These important concepts of corporate finance can be used to identify, analyze and solve the financial problems of almost every firm.
The important concepts of corporate finance are used to make investment decisions for both long and short term. All the decisions that are related to the capital investment are long-term decisions and working capital management is termed as short-term decision.
Real options analysis is one of the important concepts of corporate finance. The real options analysis helps in evaluating the two options termed as call and put options. These evaluations are also very helpful in taking the long-term investment decisions or capital investment decisions.
Another important concept that is related to the corporate finance sector is cost benefit analysis. This concept is used to determine total input in a project and the results from that project. Through this concept the corporations can identify the options where the investments can be done.
Financial analysis is also among the important concepts of corporate finance. This analysis is carried out by a group the experts. The concept of financial analysis is used in deciding the stableness and profitability of a particular business venture.
Next comes the concept of financial ratio that is also popular as accounting ratio. As a financial concept, this ratio is used widely by the managers, shareholders, analysts of different fields and many others in the field of finance. The financial ratio is used to confirm the financial condition of a particular corporation. The financial ratio is also used for the purpose of making comparisons between two or more companies regarding their merits and demerits and their financial stability.