Corporate Finance Accounting, Finance, SPSS Essay (Essay Sample)

Corporate Financial Decision Making Tools
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In the modern business world, managers have devised various tools that assist them in making sound financial decisions for the short term and long term business efficiency. Primarily, in most businesses around the world financial decision making is aimed at improving a company’s financial utilization that is minimizing the expenses while maximizing shareholders wealth. The latter is the main objective of modern contemporary companies. Financial managers focus on specific areas of financial decision making when seeking to enhance the utilization of financial and capital resources. These items include capital structure, debt utilization, and capital budgeting, and balancing between the uses of equity available to companies. Given the importance of making sound financial decisions due to increasingly volatile business environments, this paper will provide how companies make financial decisions. Therein will be some calculations associated with corporate financial decision making.
According to Zhu (2017), the most fundamental step of business financial decisions making starts with the determination of the business opportunity to be invested. In most cases, business managers are always identifying new areas of business or products to invest financial and capital resources in enhancing their shareholder’s wealth. At this stage of financial decision making, specific investment projects, financial analysis tools including NPV, WACC, and CAPM are utilized to evaluate the feasibilities of every project under consideration. Notably, the project that scores the highest under this financial analysis criteria is selected.