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Dr. David W. Brasfield
Chair,
Department of Economics and Finance
307A Business Building
Murray State University
Murray, KY 42071.
Ph.: (270) 809-4188
Fax: (270) 809-5478
Email: Dr. David Brasfield

Corporate Finance

Overview

The traditional responsibilities of a corporate financial officers may be summed up by the "Three A’s of Financial Management." These terms, all beginning with the letter "A", illustrate the historical functions of the corporate financial officer.

Anticipation – Forecasting the cash flows through the business. In order to get the most attractive financing terms, the financial officer must anticipate when the company will need money (and when there will be excess cash). Armed with this knowledge, the officer may negotiate the financing necessary well before the money is actually needed.
Acquisition – Physically raising the money needed, possibly through a bank loan, a sale of stock, or other method. Acquiring the money at the most advantageous terms is typically the responsibility of the treasurer of the company.
Allocation – Investing the money in the company. Once the necessary money has been acquired, someone must oversee the purchase of machinery, inventory, or other assets.

These are the traditional functions of a corporate financial officer. However, as the job descriptions below show, a wide variety of financial positions exist within a corporation. In almost all of the positions, you need to be comfortable with uncertainty and rapid change. Corporate finance personnel are almost always good problem-solvers. Also, in order to assure advancement at the largest firms, you should consider learning a foreign language. English is still the international language of business, but knowing any of the major foreign languages will accelerate your advancement as you are given opportunities to accept overseas assignments.

Job Descriptions

A note on salaries: Starting salaries in corporate finance with a bachelor's degree range from $25,000 to $35,000 (based on national data). Starting salaries for finance personnel with an MBA degree range from $30,000 to $70,000. Salaries obviously vary a lot depending on several factors, including the size of the company that you work for, whether you work in a rural or urban location, the quality of your education, and the amount of relevant experience that you have. The job descriptions below show salary ranges for finance positions at some leading large corporations (salaries at smaller firms may be lower). When reading them, keep in mind the factors that affect the range.

Financial Analyst

Duties vary a lot across industries. Activities may involve analyzing:

capital budgeting projects (purchase of fixed assets such as buildings and equipment),
the firm's cash flow and immediate need for financing,
long-range financial planning,
possible acquisitions, and
methods for managing the risk of the company.

Level of Skills Needed by a Financial Analyst

Communication Skills	Above Average
Analytical Skills	High
Creativity	Average
Initiative	Average
Computer Skills	High
Work Hours	40-50 hours per week

Average Pay

Starting	$23,000 - $31,000
Experienced	$33,000 - $48,000
Senior Analyst	$56,000

Treasurer

The Treasurer's office is responsible for long-range financial planning, raising funds, managing cash positions, and acquiring new assets. Treasury personnel negotiate bank loans, work with investment banking firms, and typically supervise a large professional staff of cash managers. These duties require strong communication, technical, and analytical skills.

Level of Skills Needed by a Treasurer

Communication Skills	High
Analytical Skills	High
Creativity	Average
Accounting Skills	High
Computer Skills	Above average
Work Hours	45-50 hours per week

Average Pay

Assistant Treasurer	$40,000
Treasury Manager	$67,000
Treasurer	$123,000

Risk Manager

Risk management is a rapidly growing career. Companies face risks in many different areas of their operations: currency fluctuation, natural disasters, market volatility, and fraud (to name a few). Many of these risks can be reduced through hedging in the financial markets or other means. This is a relatively new field but opportunities abound.

Level of Skills Needed by a Risk Manager

Communication Skills	Average
Analytical Skills	High
Creativity	Above average
Initiative	Above average
Computer Skills	Very high for work with derivative securities, average for other areas
Work Hours	40-50 hours per week

Average Pay

Unavailable

Benefits Officer

The benefits officer oversees the management of pension fund assets, helps set up employee 401(k) plans, determines health care benefits, and works closely with human resources personnel to set up cost-effective employee benefits. The position requires a knowledge of finance, human resources management, and some actuarial procedures.

Level of Skills Needed by a Benefits Officer

Communication Skills	High
Analytical Skills	High
Creativity	Above average
Initiative	Above average
Computer Skills	Average
Work Hours	40-50 hours per week

Average Pay

Unavailable

Investor Relations Officer

The investor relations officer is responsible for providing investors and the news media with relevant financial data about the company. The officer disseminates financial information like annual and quarterly reports, arranges for management presentations to investor groups, responds to queries from institutional investors, and issues press releases to announce information on recent earnings and dividends. The position requires a strong knowledge of both finance and public relations.

Level of Skills Needed by an Investor Relations Officer

Communication Skills	Extremely high
Analytical Skills	Average
Creativity	Average
Organizational Ability	Above average
Computer Skills	Low
Work Hours	40-50 hours per week

Average Pay

Unavailable

Credit Manager

The credit manager's office evaluates credit applications from suppliers, sets policies for collecting overdue payments, and sometime securitizes accounts receivable. The job requires the ability to analyze accounting statements and to possess some insight into the customers' personalities.

Level of Skills Needed by a Credit Manager

Communication Skills	Above average
Analytical Skills	High
Creativity	Average
Initiative	Average
Computer Skills	High
Work Hours	40-45 hours per week

Average Pay

$30,000 - $63,000

Cash Manager

Sometimes housed in the Treasurer's office, sometimes separately, the cash manager works with banks and other lenders to manage short-term credit needs, ensures that sufficient cash is on hand to meet daily needs, and places excess cash into an interest-bearing account. The work is very detailed, requires a strong knowledge of both accounting and finance, and requires a strong negotiating ability.

Level of Skills Needed by a Cash Manager

Communication Skills	High
Analytical Skills	Above average
Creativity	Low
Accounting Skills	High
Computer Skills	High
Work Hours	40-50 hours per week

Average Pay

$53,000

Chief Financial Officer (CFO)

The Chief Financial Officer is responsible for all financial activities in the firm. In a smaller firm, he or she may be given the title of Treasurer, Comptroller, or Vice-President of Finance. In a larger firm, the Chief Financial Officer will supervise both the Treasurer and Comptroller (i.e., both will report to the CFO). The CFO is a member of a company's top management team and is a key player in planning and implementing all major ventures by the company.

Level of Skills Needed by a Chief Financial Officer

Communication Skills	High
Analytical Skills	High
Creativity	High
Initiative	High
Accounting Skills	High
Computer Skills	Above average
Work Hours	50-55 hours per week

Average Pay

$145,000 - $300,000

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