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What Is The Difference Between Corporate Finance And Public Finance?

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Connor Sephton Profile
Connor Sephton answered
The easiest way to identify the differences between corporate and public finance is to identify what each type of finance is individually, and then compare the two. Broadly speaking, corporate finance is finance concerned with businesses, whereas public finance is the allocation of money by public bodies (namely the government) in order to provide equality and fairness within the economy for individual people.

Corporate finance aims to provide the maximum financial benefit for the shareholders of a business or industry which is privately owned. Corporate finance involves both long and short term decisions being made, which will benefit shareholders whilst also allowing the business itself to remain stable. Investments of money into new products, research and development, and marketing are all examples of long term decisions, which will benefit the company in the long term.

On the other hand, short term decisions may involve managing the current flow of cash - ensuring that income and output are at least balanced, and monitoring the company's spending in order to make changes via long term decisions in the future. Investment banking is also associated with corporate finance. Investment banking is when a company's finances, their income and their expenditure, are assessed in order to make them more efficient and profitable. Investment banking can help companies to expand and grow. Overall, the world of corporate finance is highly competitive and involves very large amounts of money - thousands, if not millions, of dollars.

On the other hand, public finance is the area of the economy in which the government aims to supplement and aid the economy. If market failure occurs, when the private sector fails to provide sufficient goods or capital, then the government will become involved via public finance in order to rectify any wrongs or deficiencies in the economy as a result. Taxes and a country's balance of payments deficit or surplus are all connected with public finance.
Robert Lamp Profile
Robert Lamp answered

A corporation's financial manager, typically the chief financial officer, or CFO, uses financial management to manage the corporate finance functions and transactions. Corporate finance covers the financing and investing activities of a company. Financial management is the process that corporations use to manage and direct resources. Corporate finance and financial management are intertwined.

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