Corporate Financial Management: Diversification, Valuation of Company, and Investment Appraisal Techniques

Corporate Financial
Management

Contents
INTRODUCTION...........................................................................................................................................4
PART B.........................................................................................................................................................4
TASK 1..........................................................................................................................................................4
Diversification..........................................................................................................................................4
TASK 2..........................................................................................................................................................6
Valuation of company..............................................................................................................................6
Key drivers of valuation methods............................................................................................................9
TASK 3........................................................................................................................................................11
Investment appraisal techniques...........................................................................................................11
Evaluation of investment appraisal techniques.....................................................................................14
CONCLUSION.............................................................................................................................................16
REFERENCES..............................................................................................................................................17

INTRODUCTION
Financial principles are used inside a company to produce and preserve value via sound
judgment and risk allocation. Corporate finance is concerned with the capital available that
corporations offer with the main purpose of maximizing shareholders wealth. Corporate finance
is concerned with a statement of financial position, such as its financing and management's
efforts to raise the firm's worth. The techniques and analyses used to priorities and allocate
monetary capacity are also included in accounting and finance. Corporate finance is the use of
financial instruments and analytics to boost profitability, increase price, enhancing company
results, generate and deploy capital, and mitigate economic problems. The majority of corporate
finance skilled person for firms and organizations (Jiang, Li and Wang, 2021). These very same
abilities are also useful in the military, investing banks, advising, and for businessmen who are
just beginning out or expanding their firms. The first section of this paper looks at how an
investment might balance risk and profit. In the second half, many approaches for valuing a
corporation are examined. Investment appraisal methodologies are illustrated in the report's last
section for greater understanding.
PART B
TASK 1
Diversification
Diversification is a risk management strategy. To decrease the risk associated with a given
investment scheme, an investment is divided among a wide range of payment products inside a
portfolios. Other theory behind this method is that a mixture of several asset types would
produce greater lengthy profits while lowering the risk associated with a single asset, i.e., the
profits from successful investments will outweigh the costs from unsuccessful investments.
Bonds and stocks, for instance, typically conduct in opposite directions. Share prices are
anticipated to decline as the economy is struggling. Financial institutions slash borrowing costs
to lower lending costs and boost market expenditure in order to save the economy in this state.
Treasury yields result in an increase of this (Provasi and Harasheh, 2021). If an investment's of
those both securities, the rise in bond valuations may assist to counterbalance the decline in
market valuations. Although if earnings aren't higher, the risk is lower.