Maximize your capital by maximizing your business
Why do you need to know about corporate finance?
Corporate finance is all about capital. The capital structure of your business, how to grow capital, how to establish stable cash flows, how to build cash flows, among others.
Capital is the lifeblood of your business, and it moves the needle in every single area of operations. Without capital, there is no business, and without business, there is no capital.
Knowing about corporate finance will allow you to take your business to the next level.
By understanding the capital structure, value of the business, and what types of actions you can take to increase the value of the business, you will be able to maximize the amount of capital flowing into your business, maximizing its value and its potential.
The ultimate goal of corporate finance is to achieve this maximization through rigorous planning and implementing of resources, all while balancing the risk involved in doing so.
As a business ourselves, CTL understands wholeheartedly the affect that strategic corporate planning can have on a business. We have been there before, and we understand what it takes to take your business to the next level as well.
What can we do for you?
We will begin by advising you on the balance between your company's capital structure and risk management. A company's capital structure is paramount to maximizing a business' cash flow. For example, a company funded by debt would most likely have a very aggressive capital structure, posing a risk for investors, but potentially also being the reason for rapid growth and success early on. The sustainability of such a strategy is worth investigating, and CTL will help strike the ideal balance for your business.
Following that, we will look at 3 key activities that govern corporate finance, and how they are affecting your current strategy.
Our process involves looking at capital investing, capital financing, and return of capital.
Capital Investing includes deciding whether or not to pursue investment opportunities after extensive financial analysis. It also includes using financial accounting tools to determine where cash is flowing, and how to flow capital into the budget.
Capital Financing involves optimally financing capital investments, as well as creating a harmonious balance between a business' equity and debt. Having too much debt could increase the risk of defaulting repayments, while depending too heavily on equity may dilute earnings for investors.
Return of Capital is the process where a business decides what to do with excess earnings. There are pros and cons to each option, but ultimately, it boils down to whether the business owner wants to distribute the excess capital in the form of dividends, or retain capital to fund additional projects.
What this means for you
1. Investments & Capital Budgeting
- Planning where to place the company's long-term capital assets
- Determining whether or not to pursue investment opportunities (using CTL's Investor Club's Calgary, California, and Taipei Chapters)
- Identify capital expenditures and estimate cash flows
- Decides which projects to include in the final budget
- Use financial modelling to estimate the economic impact of an investment opportunity
2. Capital Financing
- Decide the optimal balance between debt and equity
- Determine how to finance investments
- Reduce repayment risk
- Prevent excessive dilution of returns for initial investors
- Attain long-term funding through selling stocks or issuing debt securities
3. Dividends & Return of Capital
- Determine how to distribute (or retain) excess earnings
- Use potential retained earnings for business expansion
- Prevent excess use of equity
- Prevent incurring excessive debt
- Improve the value of a business' stocks