Business/ CORPORATE FINANCE term paper 20292

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Globally our entire world today has grown past the ordinary level of personal management of resources _money, assets and all that entails resources, be it liquid or solid. Economic factors which control the transaction of business which involve _risks have proved to be very unstable now, requiring professional help. Advices are rendered to people and companies by professionals dedicated to the system of entertaining companies to help develop skills, avoid risks and most importantly develop good business relationships. This corporations involved in adding for good financial decisions carry out duties of extreme importance to both individuals, companies and even �economies� of countries, which range from adding for long term and short term decisions, intermediary financial decisions, management, to financial investment analysis and recommendations for investors or investments, which invariably constitute corporate finance. Finance which is a manifestation of corporate finance, according to (Adejo, 1994, p.14) �studies and addresses the ways in which individuals, businesses and organizations raise, allocate and use monetary resources over time, taking into account the risks enticed in their projects.� The term finance may thus incorporate any of the following: (sallin, 2005, p 114) �The study of money and other assets, the management and control of these assets, profiling and managing project risks, or as in a verb from of finance which entail funds for business�. Or simply, the management of money. Corporation make financial decisions, basically because of the roles they play which is recognized as the end product of transactions. (Lumen, 2004, p20) maintained that �corporations are legal composed of national persons, exists completely separately from them�. This separation gives the corporation unique powers that other entities lack. The extent and scope of its status and capacity is determined by the law of the place of incorporation. (Gbanger, 2000, p11) �They are a group of people having authority to operate in a single unit with a separate legal existence�. They render services which cut across all aspects of business and finance they may include urban development corporations, large multimedia corporations also banking corporations.

Corporate finance according to (Menbah, 2004, p111) �is a specific area of finance dealing with financial decisions corporations make and the tools as well as analysis used to make these decisions�. The primary goal of corporate finance is to enhance corporate value without taking excessive financial risks.

(Agber, 2006, p212) �The discipline may be divided among long term and short term decisions.� Capital investment decisions comprise of long term choice about which projects receive investment, whether to finance that investment with equity or debt and when or whether to pay dividends to shareholders. Short term corporate finance decisions are called working capital management and deal with the balance of assets and current liability.

Corporate finance has a duty of guiding and leading investors to the right places, they study the existing economic situation and that of the companies who wish to invest in and in most cases use valuation methods to study and predict the future of a company rating it fit for investment or not fit enough for investment. Archiving the goal of corporate finance entails that any investment be financed appropriately to avoid lost. A corporate finance company may have the duty of selecting equities for an investor as a guide for portfolio investments in one of the FSTE 1OO Companies like British Airlines.

The corporate finance company will in most cases present an analysis which will include a fundamental analysis and valuation using the free cash flow method and a recommendation will follow. The company will present an analysis report which will look like the following to its client.

The financial record of the British Airway over the years has been quite interesting because for the past three years its net profit has appreciated steadily. (kuma2004, p11) �Since the year 2003 the British Airways have recorded success at the end of every year below is table showing the progress of British airways since 2003-2005

Year ended Turn over(EM) profile/loss

before tax (EM) Net profit/

loss(Em)

2006 7,813 415 251

2004 7,560 230 130

2003 7,88 135 72

�

It is important and interesting to note the difference in profit margin; this clearly shows and suggests that some new policies or new managerial skills have been employed to rightly enhance such a steady progress with out any break for three consecutive years.

This as undoubtedly real with reference to the table below,

Year ended Turn over(Em) Profile/low

Before tax Net profit/

Low(Em)

2002 8,340 -200 -142

2001 9,278 150 114

2000 8,940 5 -21

It represents the financial progress of the British Airways within 3 years, from 2000 to 2002.It is clear that at a point some things went wrong to have caused the year 2000 lost and the following year, a gain was short lined following the terrific loss which, came in the year 2002, certainly instability was hanging around causing havoc, principally caused by forces of management, finance and economy etc. Important to note is the fact that in the history of the British Airways since 1996 has not recorded steady progress for three good years in a roll, until now. It is immensely helping matters; its policies are positively affecting the well being of the Airways. The expansion of trade world wide has really affected the growth of the Airway by provision of more patronage. The provision of citizenship to many people has widened the operational reach of the Airway. The equity of British Airways is valuable and promising going by the presentation below showing the cash flow of the Airways, its capital expenditure and the free

(Mensah2005, p58) �Cash flow of the Airways from 1996-2005.

Year

Operating

Cash(EM) Capital

expenditure Free cash

Flow(E)

1996 415 23 392

1997 230 12 218

1998 135 6 129

1999 -200 -13 -213

2000 150 10.5 140.5

2001 5 -2 3

2002 225 19 206

2003 580 44 536

2004 640 - 553

2005 585 - 536

�

From the record above it is quite clear to predict the future and to choose to have faith in the company or not which rests on the shoulders of the client.

Based on these facts, through the company and some set backs in some years it bounced back a spontaneous recovery of the past few instance of failures recorded. Having analyzed the British Airways, the corporate financial company will go ahead as to give recommendation for investment that may look like the following.

Going by our policies of ensuring that our clients get the best. They should go ahead and study the conditions recommended for the acquisition of equity in the British Airlines and see if he agrees with the terms and conditions. Any difficulty or misunderstanding of any kind concerning the acquisition of equity should be reported for proper deliberation and response.

An interested client should source for funds following the proper procedures to get his/her business transactions. For it is only proper to do things the right way so as to avoid setbacks. Clients who are successfully into the getting of these funds should meet the authorities of our banks to stand as their partners regarding the investment. Having said that, it is important to note the fact, the British Airways has a solid financial foundation going by records, their estimated growth is wonderful, a lot of demographic changes have taken place and are still taking place, the economic changes of Britain are supporting the Air ways, not forgetting their new regulations which are doing more good to the development of the Airways. We want to formerly recommend the British Airways as one of the greatest places available for investment, please don�t waste your hard earned money on unrecognized companies, always wait and hear from us or you can always consult us for advice.

Corporate financial companies are poised to make our individual assets and economics bigger and better. The roles of these companies are inevitable.

REFERENCES:

1. Adejo, 1994 finance outsources. Kaduna, abaakpa press, p14.

2. Sallim .2005. Corporate Finance. Gboko Fidel Polytechnic press.p114

3. Lumen 2004.Management Finance.Makurdi, Pensills Publishing House P20

4. Gbanger, 2000, International Finance, Dutse, Victory Press.p11

5. Menbah 2004, Business Finance.Jos.Oracle Press.p111

6. Agber, 2006, Stock Exchange, Edo.Peterson Publishers.p212

7. Kuma, 2004.Capital Market.Osun.State University Press.p80

8. Mensah 2005.Financial Terms, Accra.Elido Press.p58

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