The word Corporate Finance can be defined in terms that may vary considerably across the world. Corporate Finance is one of the three areas of the discipline of finance and can be defined broadly as a field of finance dealing with acquisition and allocation of a corporation 's funds or resources, with the goal of maximizing shareholder wealth i.e. stock value. This division of a company is basically concerned with the financial operation of the company from company’s point of view. Every decision made in a business has financial implications, and any decision that involves the use of money is a corporate financial decision. It may include financial decisions that business enterprises make and the tools and analysis used to make these decisions. The primary goal of corporate finance is to maximize corporate value while managing the firm 's financial risks. Although it is in principle different from managerial finance which studies the financial decisions of all firms, rather than corporations alone, the main concepts in the study of corporate finance are applicable to the financial problems of all kinds of firms.
The essence of business is to raise money from investors to fund projects that will return more money to the investors. All businesses have to invest their resources wisely, find the right kind and mix of financing to fund these investments, and return cash to the owners if there are not enough good investments. In most businesses, corporate finance focuses on raising money and funds for various projects or ventures. Funds are acquired from both internal and external sources at the lowest possible cost and may be obtained through two basic ways equity and debt. Equity investors get ownership in the company but do not have a guaranteed return. Issuing stock is the most obvious way to raise funds using equity. Retained earnings (when the company uses its own earning to finance projects) are also an equity investment. With retained
References: http://books.google.com.pk/books?id=8ZF17t9eru4C&pg=PA2&lpg=PA2&dq=the+investment+principles+of+corporate+finance&source=bl&ots=A7-TONNlU2&sig=gl0-3sS9Jy7vNBcgfd0q0Mpflhg&hl=en&sa=X&ei=y4YvUayYNcbBswbrw4C4Bg&sqi=2&ved=0CD0Q6AEwAw#v=onepage&q=the%20investment%20principles%20of%20corporate%20finance&f=false http://books.google.com.pk/books?id=lOUn13iph4MC&printsec=frontcover#v=onepage&q&f=false http://encyclopedia2.thefreedictionary.com/Corporate+finance http://www.icaew.com/en/technical/corporate-finance/corporate-finance-faculty/what-is-corporate-finance-122299#sthash.aXvbGqzw.dpuf http://www.investorwords.com/6773/corporate_finance.html#ixzz2M8CMzwX1