Finance is when we grant or give some funds and manage the funds for some individual, or for business and for the government. It includes distributing the money and managing the finances for someone or lending of the funds.
It is a widespread term which is defining two activities all together at the same time.
First is, that it’s the study of managing the money. And secondly, it’s the actual process of the funds required by some individual or business to get their work or business grow.
Or we can say, that finance is a field dealing with capital funds and credit funds invested in the business. It can be defined as planning, raising, managing and controlling all the money used in the business.
In simple words, Finance is the management of money which can include investing, renting, saving, lending, budgeting, etc.
It is giving its requirements for managing wealth and investing money. It is not just about shifting of money. But it is more about the management or control of money i.e. how well are we managing the funds. Because our main motive is to develop the business with a limited expense possible.
In business, the work of a finance team is to ensure that the company has sufficient resources to work in the best way possible and to maximize productivity.
And also to check that the fortune which company has invested is used for the right purpose. And the company’s expenses and wealth are well managed.
Different types of Finance
There are mainly three types of finance: –
- Corporate (Business)
- Public (Government)
Corporate Finance (Business) :
As the name suggests that corporate finance is the type of finance used as a business point of view. The management of the funding of a company and its sources and uses of the capital. In contrast the management of the profit the company has made, and the loss statement.
In simple words, we can say that the financial activities are related to running a company with maximum growth possible. Because the main motive will always be the growth of the company.
The corporate finance professionals in the business have a responsibility of managing the company’s finances. It includes accountants, financial analysts and the managers and executives such as the chief financial officers.
Funding of the company expenses simply means raising the financial position of the company. Not only corporate finance is about the capital structure but it also deals with the sources of funds and its transmission. Transmission directly related to the fund acquisition for resources and raising the company;s financial position. Besides, maintaining the balance between opportunities and risks is one of the top responsibilities of corporate finance.
The corporate finance professionals will always be essentially bothered with escalating the shareholder profit by the long term and short term financial planning.
Examples: – Debt, Equity, Capital Structure, Return on Investment (ROI), Assets, Liabilities, Income Statement, Cash Flow , Cost of Capital, Balance Sheet, Revenues, Expenses, Profit.
Public or Government Finance
As the name ‘public finance‘ suggests that, this type of finance helps us deal with the public’s financial issues. It is the study of the revenue of the state and the expenses of the state. Moreover, it only deals with the government’s finances.
The public finance field consists of the study of the arrangement of the funds and their allocation between the various parts of the activities of the state and the state’s duties.
From the government’s viewpoint, it includes the management of a country’s national budget, the central bank, repository department, and other levels of government.
It focuses on collecting tax revenue from the public and using that money on national duties and other programs such as making roads, and hospitals, and increasing social security and more.
Examples: – Infrastructure spending (roads, hospitals, etc.), Income tax, Sales tax, Property tax, Inflation, Social security and insurance, Gross national product (GNP), Supply of money, International trading, Employment, National debt, National budget.
From a personal point of view, personal finance is the management of someone’s income which he/she is earning, or of someone’s expenses, their investments they have made in the market, and obligations.
Moreover, individuals often work with a personal bank service, adviser for financing according to their needs, mortgage broker, and other professionals to manage their financial situation.
Or we can say that personal finance is the type of finance which we use on our personal level to manage our personal expenses. And business in which we usually work with personal bankers and investments to make our financial base strong etc.
Here are some of the examples of the types of items people deal with a personal level.
Examples: – Credit cards, Bank accounts, Lines of credit, Employment income, Taxes, Personal spending and expenses, Savings, Investments (bonds, real estate, etc.), and Mortgages.
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Other types of financing
There are several other types of financing different than the 3 main types of financing which are discussed above. And that can be layered over personal, business and government finance.
Other types include
It depends upon the decisions made by the human whether it may be the social or psychical but when this judgment affects the investments. The impact individuals have on investment decision making includes biases, logic, and errors in cognition, fear, and greed.
A philosophy of making and managing investments that have a social impact and social benefit on society (in addition to an economic benefit).
Non- Profits do not have stockholders and they do not require to create any kind of earnings or economic benefit. But they still require the same varieties of financial management as other for-profit companies.
Problems You Can Face During Finance Assignment :
- English Proficiency
- Subject Knowledge
- Formatting The Assignment