• Corporate finance is the business function dealing with financial operations. Financial operations may include obtaining debt or equity financing for new business opportunities or acquisitions, and finding investment opportunities for earning interest and increasing the cash flows of the company. Companies may use a financial manager or business analyst to help them decide which opportunities represent the best return on the company's investment. While most corporate finance managers spend copious amounts of time finding effective opportunities for the business, issues may arise that limit the company's ability to accurately assess business opportunities.
  
  

Lack of Opportunities

• Companies may discover that not enough good corporate finance opportunities are available in the business environment. Most companies have a desired rate of return they want to earn when investing money into new business projects or opportunities. After evaluating each potential corporate finance opportunity, companies may determine that the current available opportunities do not meet the company's guidelines. Companies may choose to lower their investment guidelines to accept an opportunity if a decision absolutely has to be made. This choice may be made by selecting the best option out a list of bad opportunities.
  
  

Unable to Finance New Operations

• Companies often use external financing when starting new business operations or entering new economic markets. Rather than spending cash to pay for these new operations, companies often use debt or equity financing to pay for these opportunities. The corporate finance function of a company is usually responsible for obtaining the best available bank loan or equity investment for new business operations. Companies may be unable to secure the right mix of bank loans or equity financing depending on the terms or agreements that must be made to secure this financing. Failing to secure external financing may leave the company without an ability to pay for the new business operation.
  
  

Poor Cash Flow from Decisions

• Another important function of corporate finance and business is determining the cash flow from existing or new business operations. Incorrect valuation methods or other analysis derived from the corporate finance function may result in lower cash flows than expected. Lower cash flows may require the company to pay for business operations using capital reserves or external financing. Using capital reserves will lower the company's ability to pay for other short-term needs with its on-hand cash amounts. Using too much external financing to pay for under-performing business operations may create new cash outflows in the form of bank loan repayments or interest payments to investors.