Corporate Financial Strategies and Risk Management Flashcards

Vocabulary flashcards for Corporate Financial Strategies and Risk Management.

Corporate Financial Strategies

Long-term plans focused on financial growth, capital allocation, and risk management.

Capital Structure

The mix of debt and equity used to finance a company's operations and expansion.

Debt Financing

Raising capital by borrowing money, often resulting in a tax shield.

Equity Financing

Raising capital by selling ownership shares in the company.

WACC (Weighted Average Cost of Capital)

The average rate of return a company expects to compensate all its different investors.

Financial Risk

The potential for loss due to market variables such as price volatility and credit defaults.

Market Risk

The risk of losses due to factors that affect the overall performance of financial markets.

Credit Risk

The risk that a borrower will default on their debt obligations.

Liquidity Risk

The risk of not being able to meet short-term financial obligations.

Hedging

Using financial instruments like futures or swaps to reduce risk.

Derivatives

Financial instruments whose value is derived from an underlying asset or benchmark.

Mergers

The combining of two or more companies into a single entity.

Acquisitions

When one company purchases and absorbs another company.

Corporate Restructuring

Significant changes in a company's business operations or financial structure.

Cost Synergy

Cost savings achieved through the combination of two or more companies.

SWOT Analysis

A strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats of a project or business venture.

DCF (Discounted Cash Flow)

A valuation method used to estimate the attractiveness of an investment opportunity.

Market Comparables

A valuation method that compares a company's financial metrics to those of similar companies.

Shareholder Value

The value that a company creates for its owners or shareholders.

Internal Controls

Policies and procedures implemented to safeguard assets and prevent fraud.

Asset-Liability Matching

A strategy to manage interest rate risk by matching the maturities of assets and liabilities.

Currency Volatility

The degree of fluctuation in exchange rates.

Tax Shield

A reduction in taxable income, resulting in lower tax liability.

Strategic Financial Decision

Financial decisions that have long term impact and align with objectives.

Scenario Planning

Assessing potential financial outcomes.

Risk Management

Identifying, assessing, and controlling threats to an organization's capital and earnings.

Firm Valuation

Estimating the economic worth of a business.

Financial Metrics

Measurements used to assess the performance and health of a business.

Refinancing Risks

The risk of taking new debt at a higher interest rate to pay off old debt.

Tax Optimization

Minimizing tax liability through legal means.