Finance is an interesting field of study wherein the relationship between money, time and risks are being considered. The word ‘Finance’ ignites thoughts that usually deal with the study of assets, money in particular, as well as the management and control of these equities, not to mention managing and profiling the risks associated with Financial projects. Also, it is concerned with providing Financial services which is why the word ‘Finance’ as a verb usually means to provide money or funds for a business venture.
Finance has different sub branches depending on the industry that utilizes it. Finance can be used by businesses in the form of corporate Finance, governments using public Finance, entrepreneurs with personal Finance, and even other organizations which may include but are not limited to non-profit organizations and even schools. Usually, the aims of each Finance sector are attained by using the proper Financial tools that correspond to their respective institutional structure.
When it comes to business management, Finance will always find a pivotal role since it is considered the key to the success of an enterprise. Finance finds its role in the appropriation of various assets. Liquid assets in the form of money have to be managed suitably to secure an individual/organization’s success.
Corporate Finance commonly deals with large to medium-scale companies. Corporate Finance features the sale of stocks to company investors. The stocks generally give ownership to the person who buys it. For example, If you buy a share of the APC company and the company has 1000 shares (usually held by investors), then you own 1/1000 of the company. Generally, the company receives money in return for the stock which they can use to expand their company further in a process termed ‘equity financing’. The company’s Capital Structure is usually composed of the company’s equity financing together with the sale of bonds (a form of debt financing).
Personal Finance is concerned with making ends meet with a person’s needs. It involves carrying out rules of Financial undertakings to arrive at a personal decision that supplements Financial endeavors. It considers an individuals source of income or Finance which may take the form of mortgage loans, expenditures, savings, payday payments, etc. This aspect of Finance also takes into consideration the record-keeping of income, budget, net worth statements, savings, investments, estate planning, insurance, taxes and credit, among many others.
Credit, the purest form of which is the credit default swap, can also be bought and sold in the market. Credit default swaps embody the price at which the buyer and seller exchanges risks. The seller runs the risk of the credit’s default in substitute for the expense of the notational quantity to be referenced. The buyer meanwhile pays this premium and usually in the case of underlying loans and bonds, conveys this receivable to the seller and collects the par amount that is usually made whole.
Financial Management is a juxtaposition of the Financial utility of the Accounting profession. Although, we should mainly consider Financial accounting as more concentrated on the reposting of past Financial data, while having the Financial decisions geared toward the prospected future of the company.