Value investments, arrange finance and manage liquidity
Corporate Finance provides methods for valuing investments, arranging finance, preserving liquidity and managing financial exposure.
Choose the question you need to answer, then open the linked method and check its conditions of use.
Part A - Cash and decision accounts
| Working question | Start with | Result |
|---|---|---|
| What financial choice are we making, for which corporation and time horizon? | FIN.1 - Frame the Corporate Finance Decision, Corporation, Jurisdiction, and Time | A usable financial question, with the corporation, time horizon and constraints identified. |
| Will money be available when payments fall due? | FIN.2 - Assess Liquidity and Funding Needs by Date | A dated cash forecast and any funding requirement at the relevant payment dates. |
| How can stock, collections or payment terms improve cash availability? | FIN.3 - Manage Working Capital and Cash Conversion | A comparison of working-capital changes with their operating and commercial consequences. |
| Which accounts and forecasts does this financial decision need? | FIN.4 - Prepare Accounts and Forecasts for the Finance Decision | The required financial view, with material differences between the supplied accounts reconciled. |
Part B - Investment and value
| Working question | Start with | Result |
|---|---|---|
| What cost-of-capital estimate matches the cash flows being valued? | FIN.5 - Estimate Cost of Capital and Financing Constraints | A required-return estimate matched to the cash flows and claims in the valuation. |
| What does this capital project add compared with its alternative? | FIN.6 - Value Capital Projects | Incremental project cash flows and their value on matching valuation grounds. |
| What is this asset, business or ownership interest worth? | FIN.7 - Value Assets and the Corporation | A valuation of the identified asset or claim at the stated date, with its assumptions and limits. |
| What is the value of being able to wait, expand or abandon? | FIN.8 - Value Financial and Real Options | A value for the specified option under its exercise, uncertainty and financing conditions. |
| Which investments, acquisition or divestment should we compare under limited capital? | FIN.9 - Compare Capital Investments and Allocations | A comparison of feasible capital allocations, their interactions and incremental value. |
Part C - Financing, distributions and recovery
| Working question | Start with | Result |
|---|---|---|
| Which financing terms fit the corporation’s funding need? | FIN.10 - Design Financing Instruments and Terms | A comparison of arrangements by proceeds, future payments, rights and conditions of access. |
| What mix of debt and equity is feasible and useful? | FIN.11 - Select Capital Structure | A proposed financing mix compared under cash, tax, control, access and distress conditions. |
| Could covenants or refinancing remove access to funds? | FIN.12 - Preserve Covenant Headroom and Financing Flexibility | The applicable covenant or funding test, remaining headroom and available responses. |
| How much capital should we retain or return to owners? | FIN.21 - Decide How Much Capital to Retain or Return | A comparison of retention, dividends or repurchases, with an amount and form supported by the funding conditions. |
| What recovery routes remain when ordinary repayment is inadequate? | FIN.22 - Compare Financial Restructuring and Recovery Routes | A comparison of viable restructuring routes and the recoveries of affected claimants. |
Part D - Exposure and treasury action
| Working question | Start with | Result |
|---|---|---|
| How would changes in prices, rates, payments or funding access affect the corporation? | FIN.13 - Identify and Measure Financial Exposures | A financial exposure traced to the relevant claims and operations, with its decision-relevant consequences. |
| Should we hedge or transfer this financial exposure? | FIN.14 - Decide Whether and How to Hedge or Transfer Financial Risk | A comparison of protection, cost, residual risk and cash demands. |
| How do we carry out and verify this permitted treasury action? | FIN.15 - Execute Treasury and Liquidity Decisions | The verified financial effect of the selected action, or the execution problem still to resolve. |
Part E - Advice, renewal and continuing practice
| Working question | Start with | Result |
|---|---|---|
| How do we turn financial analysis into usable advice? | FIN.16 - Prepare a Finance Recommendation and Return It for a Decision | A recommended financial move with its reasons, assumptions and conditions. |
| What must be updated after a financial premise changes? | FIN.17 - Refresh Financial Models and Data | The affected model, projection or conclusion updated for its use, or a supported decision to leave it unchanged. |
| Should we retain or change the method used for this financial question? | FIN.18 - Choose Whether and How to Change Corporate-Finance Methods | A choice among method variants based on the financial result they can improve and the effort required. |
| How do we reconcile conflicting investment, financing and treasury commitments? | FIN.19 - Reconcile Simultaneous Corporate-Finance Work Across Claims and Horizons | A shared account of cash and commitments, or a comparison of needed changes to the work arrangement. |
| How can useful financial practices continue or harmful routines change? | FIN.20 - Deliberately Continue and Change Corporate-Finance Culture | A continuation or change decision informed by how the practice is learned, selected and retained. |
For questions about costs or operating accounts, use the management-accounting questions. For the parties, rights or contractual flows behind a financial result, use the financial-modeling questions.