What is finance?

What is finance?

Finance is all about the allocation and management of money and includes activities such as investing, borrowing and lending budgeting, saving, and forecasting.

Finance is the study of financial planning, asset management, and fundraising for business in financial institutions.

How anyone allocates their money in different things and manages them for earning, saving, and expanding.

Finance related to

  • Accounting which provides data in financial statements.
  • Economics which provides
  • Decision –  making tools such as pricing theory ( supply and demand ), risk analysis, comparative return analysis.
  • Information on the economic and financial environment in which the company operates.

Types of Finance

Finance is mainly divided into three segments.

  • Personal Finance
  • Corporate Finance
  • Public Finance
  1. Personal Finance

Personal Finance is specifically related to the individuals and strategies depend on the individuals earning potential.

personal Finance in managing and allocating the money of funds of an individual to achieve the desired goals in terms of saving and investment.

Personal Finance includes investment in education, assets like real estate, health expenses etc.

  1. Protection against unforseen and personal events.
  2. Preparing for long-term expenses of purchases involving a huge amount.
  3. Plane for a loan or debt obligations.
  4. Investment and wealth accumulation goals.
  5. Preparing for retirement etc.

 2. Corporate Finance

Finance is about finding the company’s expenses and building the capital structure of the company. It deals with the source of funds and the channelization of those funds like the allocation of funds for resources and increasing the value of the company by improving the financial position.

  1. Acquisition and investment in stock or other assets.
  2. Capital budgeting.
  3. Identifying the source of funding.
  4. Equity debt are creditors etc.
  5. Determining the utility of an appreciated profits for future investments, corporation, utilisation are distribution within the shareholders.

3. Public Finance

Public Finance is related to the allocation of funds and money by the government into different areas.

Public Finance is the study of finance related to government entities. It deals with the role of government income and expenditure in the economy.

Public Finance includes the distribution of income, resources allocation. Fund are majorly from taxes, borrowing from banks or insurance companies.

  1. Identifying the expenditure required by the public entity.
  2. The sources of revenue for the public entity.
  3. Determining the budgeting processes and source of funds.
  4. Issuing depts for public projects.
  5. Tax management.

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