Corporate finance focuses on four types of decisions: Investment decisions, which focus on the efficient application of resources to acquire real assets. Funding decisions, these study the way in which funds are raised so that the company may acquire the assets in which it has decided to invest. Decisions on dividends, these must be balanced with crucial aspects of the entity. On the one hand, it involves a payment of equity capital and the other is to assume that the companyґs financial resources are stationary. Management decisions, decisions regarding operational and financial daily (as part of the investment and financing decisions).

Since the basic objective of corporate finance is to maximize value or wealth for shareholders or owners, one of the key issues focuses on measuring the contribution of a particular decision on shareholder value. To answer this question, a series of techniques have been developed within corporate finance, that enable an appraisal or valuation of assets.

The following are the key concepts in corporate finance and management. There is a dilemma between risk and perceived benefits. If an investor expects high returns, he should expect higher risks. Investors tend to be risk averse, so they always seek to maximize the performance of the asset and mitigating its inherent financial risk. Therefore corporate finance theory helps the investor understand which levels of risk will accompany their investment decisions.

Another important concept is the value of money over time. Corporate finance theory suggests that it is much better to have a lot of money now than the same amount in the future. The investor will expect a return on investment on any money invested in business, as will the money saver expect to bank on interest rates. There is also a dilemma between the benefits of liquidity and the advantages of investing. Cash is needed for the every day operation of business and life in general.