Corporate Finance 2017-10-10T09:39:30+00:00

KCG Corporate Finance department headed by the CFO assesses the company’s financial situation and influences corporate decisions based on the findings from its assessments. The corporate finance department has one primary goal to maximize the company’s profit while minimizing its risks. In order to reach this goal, corporate finance is responsible for determining how much money the company should need to raise, how to use its money, how the company should invest its money. In the case of mergers and acquisitions, the corporate finance department plays a starring role in whether or not a merger makes sense in acquiring another company.

Cash Cycle

The corporate finance department also reviews the cash cycle of the company. The cash cycle of the company is the time between when the company delivers its services and the time it takes to get paid after selling the services. The cash cycle is important to the success of the business because it determines if there is a need to obtain financing (or business loans). Typically, financing is sought if the cash cycle remains the same but sales increase or sales remain the same but the cash cycle increases.

Income

The income of a business is determined by deducting its expenses from its revenues. The corporate finance department continuously monitors the income of the business by keeping track of the revenues, expenses and inventory levels of the business.

Financial Ratios

The corporate finance department uses a variety of financial ratios to calculate where the company stands and how this standing plays into the decisions made by company executives in order to continuously move the company toward profitability. Not only does the corporate finance department runs these ratios to keep moving the company toward its goals, but it also compares how the company measures up against other companies in the industry.

Corporate Finance Staff Primary Responsibilities

Corporate finance staff, under the direct supervision of the CFO, has some very important responsibilities in their jobs. Corporate finance department covers all aspects of the corporate accounting functions, from budgeting and financing decisions to general accounting operations. KCG finance department breaks up the responsibilities into smaller units, which are focused on certain aspects of the corporate finance functions.

Budget Forecast

Finance employees are responsible for creating annual budgets and reviewing actual results to these budgets. Each Division will be given a budget for its expenses; each budget is then reviewed by the Division managers for any changes or requests.

Financing Decisions

When Divisions need outside financing for their operations, the corporate finance staff helps procure favorable loan terms for the business. Corporate Finance staff accurately measure the future profits from new operations against the loan terms when obtaining bank financing.

Risk Management

Corporate Finance employees are responsible for protecting any retained capital from business operations. Accounting Operations Corporate Finance employees are also responsible for monitoring the daily accounting operations of the company.

Cash Flows

Cash flows are the influx and outflux of capital relating to our various business activities, such as resource acquisition and selling services. Cash flows allow us to pay for the expenses necessary to run the business. Corporate finance uses formulas such as the net present value and payback period to determine how much cash value different opportunities bring to the company or the length of time to restore spent capital.

Capital Structure

Capital structure is the analysis of how much debt the company takes on when financing its operations with external debt loans and equity investments. Capital structure is a primary factor in corporate finance.

Risk

Risk is a common factor found in all businesses. Risk can relate to the operational side of business or the financial side. The corporate finance formulas involve the use of a risk premium to ensure that the company does not carry too much risk in its operations.

Cost of Capital

Cost of capital represents the interest rate the company pays for external capital. This figure is the interest rate of loans and private investments. Banks require certain interest rates when investing money into businesses.

Corporate Finance must carefully analyze the cost of capital against the expected return of new business opportunities. This analysis ensures the company will be able to pay for the cost of capital and provide some profit for the company.