Corporate Finance and the Value-Creation Mindset

Corporate finance is the set of decisions that determine how a business raises capital, invests it, and returns value to its owners. In this opening lesson, Professor Michael Edwards frames the course around a value-creation mindset: every financial decision should be judged by whether it increases the firm’s long-term value, not just accounting profit or short-term cash balance.

Students will learn the core financial objective of the firm, why shareholder value is the central benchmark, and how managers think about the tradeoff between risk and return. The lesson also introduces the major decision areas covered later in the course—capital budgeting, valuation, capital structure, dividends, and working capital—so learners understand how each fits into the broader goal of creating value.