What Is Finance?
Finance is basically a word for those things about the study, management, and creation of money and financial assets. In particular, it concerns the questions of why and how a person, government or organization acquires the funds required in order to carry out its activities – also known as capital in the business context. A lot of people think that finance only refers to the acquisition of debt (money borrowed) for purposes of financing a business; however, it should be noted that finance can also encompass the acquisition of capital for purposes of building a business, whether the acquisition is by way of stock (stock purchased in exchange for money) or by way of another form such as bonds, shares, or debentures.
When it comes to the analysis of finance, there are various aspects that are of paramount importance in any such study. The most important of these is the assessment of the financial needs of an organization or a person. There are many organizations that have departments specifically devoted to this particular aspect, especially when dealing with business. One important aspect to note is that finance is a very dynamic and ever-changing field, because in order to carry out their activities successfully, organizations have to keep on improving their finances.
There are various types of resources available to those who undertake research in finance. The most basic and fundamental forms of resources available to researchers in finance are financial statements, balance sheets and income statements, and business plans, among others.
Other essential aspects of finance are financial projections, which are basically what the organization will need in order to survive in terms of its investments, and whether there are sufficient reserves in its accounts for such a venture. Another aspect of finance that should be considered is the effect of tax on the organization’s budget. This is known as the effect of taxes on the income statement.
An essential aspect of finance is the impact of various laws on the budget and on an organization. Laws that apply to one part of the organization may not necessarily apply to other parts of it. For instance, a law that prohibits employees from borrowing money against their own salaries might apply to a business that manufactures its products. However, if a company manufactures its own products, it would not apply to a company that supplies its customers with its products.
These are just some of the many different aspects that need to be considered when studying the subject of finance. To get a complete picture of finance, it is therefore advisable to conduct adequate research in the field.