Home Finance Finance Basics

Finance Basics

As the name suggests here in this article we would be discussing about the basics of Finance.

54

As the name suggests here in this article we would be discussing about the basics of Finance.

What is Finance

  • Finance means money management and other valuables that are easily cash convertible.
  • It is concerned with creation and maintenance of economic value or wealth.
  • In other words, it is a science that describes:
  1. Management
  2. Creation and Study of Money
  3. Banking
  4. Credit
  5. Investments
  6. Assets and
  7. Liabilities.

Features of Finance

  • Funds Channelisation

Financial sector and markets perform this function by channeling funds from people who have its surplus to those with its shortage. Like Mutual Funds.

  • Acquisition, Allocation and Fund Utilisation

Businesses needs ways for raising input funds. Post that they need to be allocated to its various projects and services depending on the criticality of the situation. But in the process it should ensure their effective and efficient utilisation to achieve the objective behind all this i.e Good ROI’s. (ROI : Return on Investment)

What is the aim behind Finance

  • Anticipation of needed funds

Before doing anything, there is a need for evaluation of available assets and projects. Selection of best assets and projects helps in better anticipation for the needed funds.

  • Acquisition of Anticipated funds

Prime objective behind finance is to assess the needs of a firm and then arrange them from appropriate sources.

Role Of Finance Manager

  • Financial Planning
  • Source Identification
  • Funds Raising
  • Cash Flow Forecast
  • Asset Management
  • ROI Forecast
  • Profit Distribution
  • Capital Protection
  • Time Schedule and
  • Fund Management
  • Finance Manager acts as a SPOC : (Single Point Of Control) in audit and control practices in an organisation.
  • He / She also acts as a SPOC in M&A’s : Mergers and Acquisitions
  • He / She works across the functional company divides, alongside exhibiting leadership skills.
  • He / She has a continuous focus and commitment towards value creation of an organisation.

In all, when it comes to Basics of Finance there is a lot to be learnt about. A search on Google and Investopedia can be of great help in this regard.