Funding Through A Corporate Securities Firm The goal of Transocean Securitiesâ€™ corporate finance firm is to maximize shareholder value for your company. A finance firm deals with the sources of funding and the capital structure of your corporation, working to analyse and allocate financial resources in the most effective way to increase the value of the corporation.
Transocean Securityâ€™s corporate finance firm uses investment analysis (also known as capital budgeting) in order to determine which value-adding projects should receive investment funding, and whether to finance using equity or debt capital. One of the main focuses of capital budgeting is to determine which among competing projects and opportunities the company should focus its sometimes limited resources on. Criteria for the selection of such opportunities are mostly geared toward projects that increase the value of the firm, specifically focusing on the firmâ€™s future growth. Examples of projects which may increase the value of a corporation can include, but are not limited to, expansion policies, or mergers and acquisitions. In the case where there is no growth or expansion possible for the corporation and excess surplus cash is not needed elsewhere, the management of the finance firm is expected to pay out some or all of those additional earnings in the form of dividends or repurchase company stock through a share buyback program.
Return on Investment
Return on investment (ROI) is a concept that seeks to produce an upward growth trend or appreciation in value back to the original investor. ROI is used to measure the profits gained compared to the investment made. Various methods are used to measure this before an investment is made, although profit trends cannot be 100% accurately forecasted. A few of these methods are cost-benefit analysis of the future recurring growth and sustainability of the profits from the investment.
Part of the managerâ€™s role for Transocean securities is to ensure the client, that the companiesâ€™ money is being invested wisely. Elements that the firm can leverage to provide security in potential investments is the purchasing or trading of corporate stock, shares, mutual funds, bonds issued by corporations, stock options, or other resources that can add positive value to the company. The sources of financing can either be capital that has been self-generated by the firm or capital from external funders, obtained by issuing new debt and equity. The management must decide upon the optimal mix of financing so that the capital structure results in the maximum value for the firm. For example, financing a project through debt creates a liability or financial obligation for the company, and thus the companyâ€™s value is decreased if the project does not have enough cash flow to pay off the debt in a timely manner. Such a project, or mainly, the funding for it, would be considered risky by a financial manager to ensure positive fiscal growth for the company. Equity financing is less risky on the front end, but results are a dilution of the share ownership, control, and earnings. The cost of equity is typically higher than the cost of debt, which is also a deductible expense, making equity financing costs possibly more risky than any reduction in cash flow risk. In either case, the investors are responsible for making highly analyzed decisions about where and how to invest, taking potential risk and rewards into proper account.
Transocean Securities seeks to help a corporation gain shareholder value through appropriate analysis of investments and financial strategies. Using proper risk analysis and the right mixture of capital structure strategies, the firm can aid in overall financial value increase of the company.
Published on Nov 27, 2013
Published on Nov 27, 2013
The goal of Transocean Securities’ corporate finance firm is to maximize shareholder value for your company.