Business finance decisions are related to the resources of a business and they can be grouped as investment decisions, financing decisions and operating decisions.

The main sources of finance for companies can be grouped as:

• Internal Funds

• External funds

The combination of internal funds and external funds creates the financing
structure, in other words the capital structure of the company.

Financial markets are institutions and procedures which facilitate the transfer
of funds through financial transactions involving financial claims.

• Efficient allocation of capital

• Price discovery

• Liquidity

• Risk Sharing

Money markets include short-term securities like commercial paper and
treasury bills

Working capital can be financed by:
• Accrued wages and salaries,
• Accrued taxes,
• Short-term loans provided from commercial banks, finance companies or factors,
• Issuing

Pro forma income statement exhibits forecasted revenues and expenses for a
future period.

Pro forma balance sheet displays forecasted assets and total financing provided by debt and equity financing at a future date.

Companies usually finance their long-term assets with long-term resources such as long-term trade credit extended by their suppliers, long-term leasing, long-term bank loans, or by issuing bonds or stocks.

Capital lease is a lease agreement by which the lessee rents the property and
makes regular payments to the lessor for a specified number of months or years.

Preferred stock is a hybrid security.

The capital budgeting process involves economic analysis and selection of projects according to some criteria determined by the management of the company

Investment decisions can be grouped as:
1. Assessing the profitability of a single investment project.
2. Assessing the relative profitability of competing investment projects.
3. Selecting the best investment projects in a
portfolio of projects with a limited budget.

There is a positive relationship between risk and return. Investors will not be willing to assume additional risk unless they expect to be compensated with additional return.

Basic types of risk for a business can be classified as:

• Credit risk (Default risk)

The risk that a company or individual will not be able to pay the contractual interest or principal on its debt obligations.

• Market risk

The risk that the value of an investment to fluctuate due to general market conditions.

• Political risk

The risk that a country’s government will suddenly change its policies.

• Operational risk

Various risks that can arise from a company’s ordinary business

Government bonds, Stocks, Corporate bonds

Shareholder value can be improved with the help of Chief Risk Officer
(CRO).

We can analyze the role of financial decisions in creating shareholder value by grouping them under different aspects.

-Investing aspect of value creation

-Financing aspect of value creation

-Operating aspect of value creation

Economic Profit or Economic Value Added (EVA) is a form of economic profit

Capital Markets Board of Turkey’s Corporate Governance Principles consist of four main sections, namely

shareholders,

disclosure and transparency,

stakeholders and board of directors

The main stakeholders of the business are customers, suppliers, employees,
environment, government, competitors, investors and the society.

To fight against fraud and corruption, companies can establish internal control systems. Typically, implementation of internal controls involve the following steps:

• Identification of possible internal and external threats,
• Identification of internal processes,
• Identification of process gaps using control assessment tools,
• Implementing internal controls to fill gaps with strong control processes,
• Testing the controls with an early warning system.