As a corporate finance professional, you will focus on all of the money-related decisions that a company or organization makes, all of which are tied to the decisions that these organizations make. Corporate finance professionals actually work with all businesses, and not merely corporations.
Your primary goal as a corporate finance professional will be to determine how to maximize the value of a company by making good investment decisions, as well as proper decisions about dividends and financing. In other words, you will concentrate on how a business should best allocate scarce resources that maximize profits and reduce expenses so they are as low as possible.
Corporate finance professionals also use their skills to determine in the end what the company should do with its profits. How much of these funds should be reinvested into the organization, and how much of it should be paid to the owners and employees?
What Is Corporate Finance?
Corporate finance is a broad term that refers to all of the financial activities that are related to running a company, normally with a department or division that has been set up to oversee such activities. Corporate finance is largely concerned with increasing shareholder value via short term and long term financial planning. Corporate finance includes everything from capital investment to investment banking.
Capital investment decisions are especially critical to the success of corporations. Should a certain investment be made, and how will the company pay for it – with debt or equity? Or would a combination of debt and equity be better? Should company shareholders receive dividends on their investments? These are just a few of the critical questions that a corporate executive will need to answer often. Some of the short term issues that are dealt with in this area include management of current assets and liabilities, inventory control, investments and a variety of other financial issues in the short term. Some of the long term issues include new purchases of capital, and various investments.
As the economy is getting stronger after the last downturn, there is a strong and growing demand for a variety of financial professionals who deal in corporate finance and related matters. The Bureau of Labor Statistics or BLS states that business and financial operations will grow by 9% from 2016 to 2026, which is faster than average. All of the occupations in this area will add approximately 750,400 jobs.
One of the faster growing, finance-related occupations is financial analyst. BLS estimates that the need for financial analysts will increase by a healthy 11% from 2016 to 2026, which is faster than average. Financial analysts will be in demand to work in corporate finance and to review various investment opportunities when new companies are started or older ones expand.
Another occupation that deals heavily with corporate finance that is seeing strong growth is top executives. Those who work with corporate finance mainly are chief executive officers and chief financial officers. Job growth in these professions will be 8% from 2016 to 2026.
BLS states that there were 296,100 financial analysts working in the United States in 2016. The largest employers for these workers were:
- Securities, commodity contracts, and various financial investments: 24%
- Professional, scientific and technical organizations: 14%
- Credit intermediation and related activities: 13%
- Management of companies and enterprises: 12%
- Insurance carriers and related organizations: 7%
For chief executives, there were 308,000 workers in 2016. The biggest employers of chief executives were as follows:
- Self-employed: 23%
- Professional, technical and scientific services: 8%
- Government: 8%
- Manufacturing: 7%
- Healthcare and social assistance; 7%
The median annual pay for financial analysts in 2016 was $81,700, and the top 10% earned more than $165,000 per year. Median salaries in various industries were:
- Securities, commodities contracts, financial investments: $96,930
- Professional, scientific and technical services: $83,000
- Management of companies and enterprises: $80,300
- Credit intermediation and related organizations: $77,200
- Insurance carriers: $74,600
BLS states that chief executives have a median salary of $181,000 per year, with the top 10% earning more than $208,000 per year. Salaries vary depending upon the industry:
- Professional, scientific and technical services: $208,000
- Manufacturing: $201,000
- Healthcare and social assistance: $150,300
- Government: $107,800
Professionals who want to work in corporate finance or finance generally may want to consider the cities listed below. These are considered the most affordable cities according to CNBC in 2017, taking into account potential salary and cost of living. These cities are highly ranked because people who work in finance have high income but reasonable rents and mortgages:
- Charlotte NC
- Dallas TX
- Phoenix AZ
- Boston MA
- Chicago IL
- New York City
- Seattle WA
- Austin TX
- Minneapolis MN
- San Francisco CA
- Pittsburgh PA
- Denver CO
- Nashville TN
- Washington DC
Between mortgage companies, investment banks and insurance providers, there are many great places to work in the US in the financial field. The best employers provide corporate finance professionals with good pay, great benefits, low stress and high job satisfaction. According to Business Insider and Payscale.com, the companies below are the best to work for in the financial sector:
- American Express: $98,000 per year
- TIAA: $111,000
- USAA: $80,500
- Chubb: $85,000
- Fannie Mae: $114,000
- New York Life Insurance: $76,000
- Principal Financial Group: $71,800
- Fidelity National Financial: $96,000
- Capital One Financial: $96,100
A good way to get your foot in the door in the financial field is to earn your bachelor’s degree in finance. You will develop a strong foundation in basic finance principles, capital management, portfolio and investment management, financial institutions, and personal finance. Earning a bachelor’s degree will put you on your way to working in corporate finance, financial analysis, security analysis and personal financial planning.
For finance professionals who are moving up in the finance world, a very smart move is to earn an MBA with a focus on corporate finance. With an MBA in corporate finance, you will learn how new organizations raise capital, how companies choose a capital structure in equity or debt, and the governance structure of corporations. You may take courses in corporate finance, entrepreneurial finance, investment banking and valuation.
For many professionals who desire a career in corporate finance, studying online is a definite possibility. Today, there are many excellent finance degrees that can be learned mostly online. For example, Penn State University offers an AACSB-accredited Master of Science in Finance that will provide you with a strong foundation in financial modeling, capital budgeting, statistics, forecasting, financial accounting, strategic financial decisions and more.
To be considered for an MBA in corporate finance, you may need to have these types of qualifications:
- 0 GPA or higher
- GRE or GMAT scores
- Official transcripts
- Updated resume with at least three years of finance-related work experience
- Personal statement or essay
- Two or three professional or academic references
Every university will have its own finance curriculum, but an AACSB-accredited program, such as Penn State mentioned above, will have a rigorous finance curriculum that will give you the skills to succeed in corporate finance. Courses in that master’s in finance program include:
- Quantitative Methods in Finance
- Analysis of Financial Markets
- Financial Accounting Theory and Reporting Problems
- Current Issues in Corporate Finance
- Speculative Markets
- Financial Decision Processes
- Portfolio Theory and Policy
Earning a bachelor’s or master’s degree in finance or business administration can be expensive. But there is plenty of grant and scholarship assistance available for those with good qualifications and who spend the time looking for financial help. Below are some good options for students studying finance. Also remember to check with your school’s financial aid office; there may be some specific scholarships for that university for which you can qualify:
- Corporate Finance Institute Scholarship: $500
- Coca-Cola Scholars Program Scholarship: $20,000
- Dell Scholars Program: $20,000
- AICPA Student Scholarship: $10,000
- Ritchie-Jennings Memorial Scholarship: $10,000
- Crush the CPA Exam Scholarship: $1000
- NABA Scholarship Programs: $1000 to $5000
- Government Finance Professional Development Scholarship: $9000
- Frank L. Greathouse Government Accounting Scholarship: $9000
- Goldberg-Miller Public Finance Scholarship: $14,000
The finance certifications below can be highly useful to professionals who want to work in corporate finance:
- Chartered Financial Analyst (CFA)
- Certified Public Accountant (CPA)
- Financial Risk Manager (FRM)
- Certified Financial Planner (CFP)
- Financial Modeling Certification
- Certified Credit Professional (CCP)
- Chartered Global Management Accountant (CGMA)
Some associations to consider for expanding your corporate finance career options include:
- Association for Financial Professionals
- American Finance Association
- Financial Management Association International
- Commercial Finance Association
- American Association of Finance and Accounting
- American Financial Services Association
- International Corporate Finance Group
With a degree in finance, you will be able to work your way up in the highly rewarding field of corporate finance. You can earn a high salary and enjoy a great deal of job security, as well as the satisfaction of helping companies to build into more successful workplaces.
- Corporate Finance. (n.d.). Retrieved from http://www.investopedia.com/walkthrough/corporate-finance/
- Financial Analysts. (2015, Dec. 18). Retrieved from https://www.bls.gov/ooh/business-and-financial/financial-analysts.htm#tab-3
- Top Executives. (2015, Dec. 18). Retrieved from https://www.bls.gov/ooh/management/top-executives.htm#tab-5
- 15 Cities Where You Can Get a Well Paid Finance Job and Cheap Housing. (2017, March 16). Retrieved from https://www.cnbc.com/2017/03/16/15-cities-where-you-can-get-a-well-paid-finance-job-and-cheap-housing.html
- Best Finance Companies to Work For. (2016, May). Retrieved from http://www.businessinsider.com/best-finance-companies-to-work-for-in-america-2016-5