Our understanding of the financial world is incorporated in the theory of finance; his profound knowledge is therefore a necessary condition for making good financial decisions. The study of finance is essentially a search for theories that provide a better understanding of the financial aspects of the company. Under the name of finance we can find, at least three approaches. Each of which refers to the same set of operations and transactions, but analyzed from different points of view. A business or corporate finance: is the more developed approach so far, since it examines the finances of the company from the standpoint of the director or person responsible financial, i.e. from and for if same. It focuses on the analysis in the way in which companies can generate value and maintain it through the efficient use of financial resources. Within this approach are three big components exemplified in Figure 1.
1) Investment decisions, focusing on the analysis of the acquisition or replacement of the real assets of the company. These can be tangible and intangible assets such as machinery, equipment, infrastructure, trademarks, patents, etc. In which the company must invest to comply with the objectives laid down. ((2) Funding decisions, which analyzed the different alternatives for obtaining the necessary funds to finance the company’s operations indicated in point to). In this analysis, Chief Financial Officer, evaluated the possibility of a bank loan, the issuance of new shares in the case of a company that traded a contract leasing for leasing of capital goods, or the deferred payment to suppliers (commercial credit), among others. (3) The managerial decision-making, which are basically concentrated in the analysis of the systematic procedures that govern the day to day operational and financial decisions, such as: (box) Treasury management, inventory management or stock of products, the volume and the rotation of the credit to customers or accounts receivable, the remuneration of staff, among others. As shown in Figure 1, a company requires a myriad of real tangible and intangible assets (machinery, equipment, infrastructure, trademarks, patents, etc.) which are used for the production of goods and services that cater to your target market for its ordinary operations.
These acquisitions imply an outlay or expenditure by the company (line A), and to the extent that these investments are incorporated into the operation of the same, increase you or generate a flow of income or benefits (line B). Once the investment decision, the Chief Financial Officer must analyze various alternative forms of finance such acquisitions. In General, companies basically have 2 alternatives: resort to the own funds through the application of profits or undistributed profits (line D); It commonly referred to this source of funding as an intern. Or resorting to funds coming from the different instruments available in the financial market (line C), in which case, generates for the company, in the future, a graduation of funds in concepts of interest and/or dividends (line E). In this case, the company would be resorting to an external source of financing. The basic problems all director faces which, Manager or financial manager are: 1 how much the company should invest and in what assets should be done? 2 How should get the funds needed to make such investments? The first question is answered from the Economic Dimension of the company. The area suitable for analysis are techniques for evaluation of projects of investment or capital budget. The second question is answered from the financial business Dimension. His analysis is done in what is called the funding decisions.