What is Finance?
Finance is all about taking decisions of financial resources i.e. how money or funds will receive and ensure the right use of resources for maximizing financial benefit. Before 1960 the term finance refers only the collection of funds but after that, the idea was changed. The fiancial function is not only limited to collection of funds/money but also ensure the proper utilization of funds. It is the responsibility of finance manager to ensure right use of financial resources.
Finance is lifeblood of every corporation because it is not possible to do any business activity without funds. Many people say that the overall activities related to planning, organizing, raising, conservation, using and controlling funds.
Areas of Finance
Personal and corporate finance are two broad areas where an effective financial decision may bring thousands of dollar. So everyone should be awere of its basic principles and why it is necessary to aquire financial concepts. Financial analyst is responsible for identifying most worthy source of investment and financing. Time value of money is one of the core principle of finance which is overlooked by many investors. Every financial decision is related with cost. A better financial decision is the reason of being successful.
According to Harvard & Upton, it is that administrative area which is concerned with the arrangement of cash and credit effectively.
Three Interrelated Areas
- Money & Capital Market
- Financial Market
Finally concluding with the idea, it is not the only collection of fund where the funding cost is lower and then utilizes it to ensure the maximum rate of return for the investors. Managing funds is not an easy task but it is management’s responsibility to manage the funds which can ensure higher profitability and the substantial growth of a company.