Corporate Finance

Corporate Finance is about how companies make decisions about what projects to pursue and how to value those projects.

Ratio Analysis

Ratio Analysis is taking two numbers from financial statements and dividing one by the other. What we are doing is taking two pieces of accounting data, put one over the other, and this forms a ratio. We are taking two pieces of data and forming a performance metric. Ratios are usually presented as a percentage or a number depending on whether the usual case is bigger or less than one.

Time value of money

Time is money, literally. If there is a prospect of receiving a certain sum then the sooner you receive it the more it is worth. Interest rates describe this relationship between present value and future value.

Discounting Cash Flows

A company is essentially an entity that generates cash flows each year into the future. The trick is estimating those future cash flows and how much they might grow or shrink and what the risks are to realizing (receiving) them.

Present value and Future value

$100 invested for one year, earning 5% interest, will be worth $105 after one year, therefore $100 paid now and $105 paid exactly one year later both have the same value to a recipient who expects 5% return. That is $100 invested for one year at 5% interest has a future value of $105.

Net Present Value

The way we look at decisions about whether to fund a project or calculate the value of an asset is to turn that stream of future dollars into today’s dollars. Then we compare that sum of present value, we don’t do the deal, if t is less, it is considered a good deal.

Business analysis, financial investment concept. Businessman, analyzing stock market report on digital tablet and laptop computer with market summary and financial graph

Benefits of Private Equity

Private equity enables companies to better exploit their potential. With the capital that private equity firms and their funds provide, they can drive their development and remain independent.

Raising money for your business through equity finance can have many benefits, including:

  • The funding is committed to your business and your intended projects. Investors only realise their investment if the business is doing well, eg through stock market flotation or a sale to new investors.
  • You will not have to keep up with costs of servicing bank loans or debt finance, allowing you to use the capital for business activities.
  • Outside investors expect the business to deliver value, helping you explore and execute growth ideas.
  • Some business angels and venture capitalists can bring valuable skills, contacts and experience to your business. They can also assist with strategy and key decision making.
  • Like you, investors have a vested interest in the business’ success, ie its growth, profitability and increase in value.
  • Investors are often prepared to provide follow-up funding as the business grows.

 

minamargroup.com

investorrelations.mmg@gmail.com

The Advantages of Company Mergers

Mergers happen when two businesses join together to create a single, unified company. Business owners may enter into merger negotiations for a variety of reasons, with mergers generally happening between large and small companies. A small, struggling business might become absorbed by a large conglomerate. Two large companies may join forces to become stronger.

The main benefit of mergers to the public are:

1. Economies of scale. This occurs when a larger firm with increased output can reduce average costs. Lower average costs enable lower prices for consumers.

2. International competition. Mergers can help firms deal with the threat of multinationals and compete on an international scale. This is increasingly important in an era of global markets.

3. Mergers may allow greater investment in R&D This is because the new firm will have more profit which can be used to finance risky investment. This can lead to a better quality of goods for consumers.

4. Greater efficiency. Redundancies can be merited if they can be employed more efficiently. It may lead to temporary job losses, but overall productivity should rise.

5. Protect an industry from closing. Mergers may be beneficial in a declining industry where firms are struggling to stay afloat.

6. Diversification. In a conglomerate merger, two firms in different industries merge. Here the benefit could be sharing knowledge which might be applicable to the different industry.

minamargroup.com
investorrelations.mmg@gmail.com

 

 

Benefits of IPO

There are various reasons why a company should consider an IPO.

 

Company will gather a significant amount of funds by opening up to the public and allowing shares to be traded in an organized market.

 

Benefits of IPO:

— Financing
— Liquidity
— Recognition
— Institutionalization
— SPOs
— Credibility

Financing
Public offering primarily provide companies the opportunity to obtain capital through a reliable organized, transparent market structure.

 

Liquidity
The shares offered to the public can be bought and sold in a transparent manner at the prices determined according to the market supply and demand at an arbitrary time, liquidity is provided to the shares and an important opportunity is provided to existing shareholders.

 

Global Recognition
Various information about the companies whose shares are traded on the Exchange are constantly being delivered to the foreign investors through global press, data broadcasting and other visual broadcasting organizations within the framework of the transparency of the Exchange and the function of public disclosure.

 

Institutionalization
Being publicly traded adds to a company’s stature as an institution, which can enhance its competitive position.

 

Secondary Offerings
Companies can create financing opportunities not only with the primary public offering but also with “Secondary Public Offerings” according to the resource requirements arising from their investment and similar needs while restricting the pre-emptive rights of existing partners.

 

Credibility
Listing their shares in the Exchange, companies increases their credibility in banking and money market which enables to obtain loans cheaper and easier.

 

minamargroup.com

investorrelations.mmg@gmail.com

Importance of Investor Relations

Investor Relations combines finance, communication, and marketing to effectively control the flow of information between a public company, its investors and its stakeholders.

It’s of the utmost importance for companies to maintain strong, transparent relationships with investors. Because of this in companies Investor Relations department comes into play.

Some of the main goals of investor relations are:

  • Enabling the company to achieve the optimum share price of the company that reflects fundamental value
  • Representing Company to investors and vice versa
  • In a timely and accurate way to provide financial information to investors
  • Building receptive capital markets for future financing at favorable terms

Benefits of Investor Relations Team

  • Maintaining loyal shareholder base
  • Enhancing long-term shareholder value
  • Ensuring receptive capital markets for future financing
  • Lowering the cost of capital
  • Building long-term credibility with the investment community

Because IR fulfills so many duties and functions in so many capacities, it’s essential that the department stay fully integrated with nearly every other department in the company, such as the legal and accounting departments, as well as with the entire executive management team.

minamargroup.com
investorrelations.mmg@gmail.com

Relations-with-Investorsmmg