Finance Basics
What is Finance?
Finance is allocation of assets and liabilities over period under various circumstances. The utmost important point in finance is time valuation in terms of money, like the value of currency today has more value when equated to same unit of currency tomorrow. Finances main objective is valuate assets in according to their level of risks and projected rate of return. It directly or indirectly refers to the involvement of money.
The term finance formulates numerous and incalculable definitions. However, it is challenging to deliver a faultless definition for finance. A few statements will aid in comprehend its wide meaning:
Finance in common terminology means management of cash or other valuables, which can be transmuted into money. In broader term finance is the science of funds management. Finance involves inflow of money and often outflow of money.
Simon Andrade, defines the term finances of the following ways: 1) "Area of economic activity in which money is the basis of the various embodiments, whether stock market investments, real estate, industrial, construction, agricultural development, so on. ", and 2)" Area of the economy in which we study the performance of capital markets and supply and price of financial assets "
According to Bodie and Merton, finance "study how scarce resources are allocated over time"
For O. Ferrel C. and Geoffrey Hirt, the term finance refers to "all activities related to obtaining money and effective use”
Features of Finance
Importance of Finance
- Necessary to start business
- Aids expansions of the business
- Finance is required as a part of working capital for the businesses
- Finance is also required for research and development.
- In addition, a solid financial base benefits the business earn goodwill.
- A solid financial base aids the business increases consumers and investors’ confidence on the business. [LO-1.1]
Identify the sources of finance available for the business?
Sources
Finance is allocation of assets and liabilities over period under various circumstances. The utmost important point in finance is time valuation in terms of money, like the value of currency today has more value when equated to same unit of currency tomorrow. Finances main objective is valuate assets in according to their level of risks and projected rate of return. It directly or indirectly refers to the involvement of money.
The term finance formulates numerous and incalculable definitions. However, it is challenging to deliver a faultless definition for finance. A few statements will aid in comprehend its wide meaning:
Finance in common terminology means management of cash or other valuables, which can be transmuted into money. In broader term finance is the science of funds management. Finance involves inflow of money and often outflow of money.
Simon Andrade, defines the term finances of the following ways: 1) "Area of economic activity in which money is the basis of the various embodiments, whether stock market investments, real estate, industrial, construction, agricultural development, so on. ", and 2)" Area of the economy in which we study the performance of capital markets and supply and price of financial assets "
According to Bodie and Merton, finance "study how scarce resources are allocated over time"
For O. Ferrel C. and Geoffrey Hirt, the term finance refers to "all activities related to obtaining money and effective use”
Features of Finance
Importance of Finance
- Necessary to start business
- Aids expansions of the business
- Finance is required as a part of working capital for the businesses
- Finance is also required for research and development.
- In addition, a solid financial base benefits the business earn goodwill.
- A solid financial base aids the business increases consumers and investors’ confidence on the business. [LO-1.1]
Identify the sources of finance available for the business?
Sources