TELF AG: Structuring and ensuring adequate funding and capital structure

Corporate finance is a critical aspect of business operations that involves deciding how a company will raise and allocate funds to maximize shareholder value. The primary objective of corporate finance is to optimize the balance between risk and return to ensure the long-term sustainability and growth of the company.

One of the critical activities of corporate finance is capital structure management. This pursuit involves deciding on the mix of debt and equity the company should use to finance its operations and growth. Debt financing refers to the rise and use of bank loans, including structured and transactional trade finance facilities, working capital facilities, and other forms of loans, while equity financing involves the use of own funds and the support from the shareholders. A company’s capital structure is crucial as it affects the cost of capital, its risk profile, and the ability to raise funds in the future.

Corporate finance also involves managing cash flow and liquidity. This process includes ensuring the company has adequate cash resources to meet its short-term obligations and can access additional funding when needed. Good cash flow management is essential for companies to meet their day-to-day operations, invest in growth opportunities, and pay dividends to shareholders.

In addition to these core activities, corporate finance must cooperate closely with risk management functions. This job involves actively collaborating with financial and credit risk management to identify, assess, and mitigate financial and credit risks that may impact the company’s economic performance. For example, companies may use financial derivatives such as options and futures contracts to manage currency, interest rate, and commodity price risk. Corporate finance must ensure that the financial risk manager has the right tools and financial flexibility to operate these risk management tools.

Corporate finance plays a crucial role in enabling the company’s trading activities. It must, therefore, strictly cooperate and coordinate with trading and operational functions to ensure that the commercial activities are adequately supported, and the financing capacity is structured to match the operational and commercial activities.

In conclusion, corporate finance is a complex and dynamic field that plays a critical role in shaping a company’s success. It involves making informed decisions about funding structure, capital deployment, and cash flow planning and strictly cooperates with management, operation, and trading functions. Therefore, companies that invest in their corporate finance function and align it with their strategic objectives are well-positioned to achieve sustainable growth and maximize shareholder value.