Business finance is a term that encompasses a wide range of activities and disciplines revolving around the management of money and other valuable assets. Business finance programs in universities familiarize students with accounting methodologies, investing strategies and effective debt management. Small business owners must have a solid understanding of the principles of finance to keep their companies profitable. Finance is one of the most important functional areas of business and within business firms. It joins other functional areas like marketing, operations technology, and management as key areas of business. Business owners and business managers have to have at least a basic understanding of finance even if they outsource certain areas of their financial operations. The goal of this website is to provide that sort of understanding to its readers. The goal of this article is to help you understand the three areas of finance and their relationship to your company. There are three major areas of finance:
• Corporate or Business Finance
Corporate or business finance is the area of finance that incorporates the actions of the company when it makes decisions about the financing decisions of the firm and the investing decisions of the firm. When a business firm invests in a project, such as buying inventory, that firm has to figure out a way to pay for that inventory. Paying for the inventory, in terms of finance, is making a financing decision for the firm. For each investment decision by a business firm, there has to be a financing decision. In other words, every time a business owner buys something, they have to figure out how to pay for it. Other areas of corporate finance within a business firm are budgeting, managing working capital, financial analysis, financial statement development, and more. Many students who study finance in college study corporate finance with the job goal of working in a major corporation when they graduate. In order to get a...
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