INTRODUCTION TO FINANCE
Finance is that business activity which is concerned with the organization and conversion of capital funds in meeting financial needs and overall objectives of a business enterprise. Finance is the science of funds management.
The general areas of finance are business finance, personal finance and public finance. Finance includes savings money and often includes lending money. The field of finance deals with the concepts of time, money and risk and how they are interrelated. It also deals with how money is spent and budgeted. Finance is very essential for the smooth running of the business. Finance controls the policies, activities and decision of every business
The economic development of any country depends upon the existence of a well organized financial system. It is the financial system which supplies the necessary financial inputs for the production of goods and services which in turn promotes the well-being and standard of living of the people of a country.
Finance is one of the major components of the economy. This activates and stimulates the overall growth of the economy. Finance is a body of principles and theories. This deals with rising & acquiring of funds on reasonable terms and use of money by the acquire in the modern money oriented economy, finance is one of the basic foundations of all kinds of economic activities. It is master key, which provides access to all the sources for being employed in manufacturing and merchandising activities. It is rightly said that, “business needs money to make more money”. Efficient management of every business enterprise is closely linked with efficient management of finance.
“Finance is that business activity which is concerned with the organization and conversation of capital funds in meeting financial needs and overall objectives of a business enterprise.”- Wheeler
Financial management is that managerial activity which is concerned with the planning and controlling of a firm financial reserve. Financial management as an academic discipline has undergone fundamental changes as regards its scope and coverage. In the early years of its evolution it was treated synonymously with the raising of funds. In the current literature pertaining to this growing academic discipline, a broader scope so as to include in addition to procurement of funds, efficient use of resources is universally recognized. Finance is the study of funds and management. It also deals with the concepts of time, money, risk, and the interrelation between the given factors. It is basically focused on how the money is spent and budgeted. It is one of the most important aspects in handling business finance addresses the methods wherein business entities used their financial resources on a certain period of time.
FUNCTIONS OF BUSINESS FINANCES
The financial functions of a business may be started as the procurement of funds and their effective utilization. The functions of financial manager are to plan cautiously and execute the financial objectives with great care. He should review and controls and execute the financial objectives with greater care. He should review and control the financial decisions to commit or recommit the funds to new or outgoing uses. Thus, in addition to raising funds, financial management is directly concerned with production , marketing and other functions of an enterprise.
The main functions of business finance are:
1. Funds requirement decisions.
2. Financing or Capital – mix decisions.
3. Investment or long –term mix decisions.
4. Liquidity or short-term assets mix decisions.
5. Dividend or profit allocation decisions.
6s ‘A’ MODEL OF FINANCIAL MANAGEMENT
Anticipating Financial Needs.