Hello, my name is Amy and I'm with the Client Service Delivery Group at
BNY Mellon based in East Syracuse, New York.
Congratulations on your progress so far in the Essentials of
Corporate Financial Analysis and Decision Making Coursera program.
I'm sure you're finding it really helpful to come to grips with the language and
concepts of modern business, but you likely still have questions about the role
of banks and other financial institutions and how these various institutions help to
make the global marketplace function efficiently from day to day.
I'd like to explain to you a little more about what BNY Mellon does in terms of
helping businesses with their decisions for raising capital or investing capital.
So let's start at the beginning.
Our partners and clients are generally looking for one of two basic things.
To raise money to invest in their business, to help it grow and
increase profitability or to invest money that they already have.
These parties in the market have a symbiotic relationship.
One providing capital to the other, in return for gains.
Let's start with a company looking to invest their capital.
There's a lot to consider before a company seeks investment opportunities.
They often begin their work by looking closely at the strategic goals,
business needs and of course, their accounts.
There are many options companies can consider to invest their capital,
such as restructuring or investing directly in their business, acquiring or
merging with other companies, or making other types of investments.
Let's tie this in with the earlier sessions of the course
where accounting was discussed.
Understanding concepts like NPV and IRR are important.
NPV is the net present value, and it means that you deduct your outgoings and
costs from your income on a particular project or line of business, and
then discount the net to take into account inflation and the changing value of money.
It's a good concept,
as it lets you know the real time performance of your business.
So if I was looking to expand and grow by taking over one of my local competitors,
I'd have to look at their income and also shaded costs over let's say,
the next five years and consider other external factors,
such as a rise in inflation, that could eat away at my profits.
If a business is considering a few options for projects for
investments, then IRR is useful.
Internal rate of return takes the NPV and uses a ratio to get it to zero.
The purpose of this is to compare different acquisitions and
projects in terms of how profitable they can be.
These concepts so far involve making an investment in another business
with the desired outcome of making money or growing your own business.
Another important concept in business is the pursuit of organic growth potential.
This involves looking for ways to cut costs, improve profits and
enhance efficiency.
I have read that modern business theories suggest that making your business lean
is a never-ending process, as you can always do things faster, better or for
greater returns.
Now let's talk about those companies who need to raise money.
They too have numerous options to consider before stepping onto a bigger stage.
To tell you more about that, I'm going to hand the discussion over to my colleague.