Finance is a branch of science that encompasses an array of economic and financial principles, aiming to increase the value of an individual, business company, or public entity. It focuses on money and the level of risk associated with many of the financial ventures. Finance studies and explains the processes through which money is saved, used, or spent.
Personal Finance
Personal finance focuses on the application of diverse financial principles to the financial decisions of a family unit or individual. It deals with how the money is obtained and how it is spent. The decision-making often times involves the elements of time and risk taking. Personal finance involves credit cards, personal loans, bank accounts, insurance policies, tax management, and personal investments.
Corporate Finance
Corporate finance focuses on the task of administering funds for the company's different activities. The application of financial concepts at this level intends to increase the company's overall value. Risk management is also brought into the equation by decision makers. All business entities deal with and try to predict potential risks. It is the management of these risks that determine whether or not a business entity will be ultimately successful on the market.
Financial Management
Finance covers three major areas: investments, financial markets and institutions, and investments. Financial management focuses on how a business entity or a person budgets or allocates financial resources in order to ensure a successful inflow of cash. This involves maintaining and administrating a person's or a company's financial assets. Financial managers are hired by companies to continuously assess the financial situation of the business enterprise and come up with profit generation strategies. Financial management is the task of one manager or a team of experts. There is a direct relationship between the competence of the financial manager and the cash flows of the company.
Financial Institutions and Markets
Financial institutions include banks, credit unions, insurance entities, and investment funds. These intuitions function as intermediaries between debt and capital markets and creditors and borrowers. They help facilitate the flow of cash from businesses, investors, clients, and many other entities. Financial institutions operate to provide financing to businesses, earning profit as part of the lending process. Financial entities aim at giving financial security to clients, using different tools such as savings and insurance policies. Financial markets provide a mechanism that enables people to purchase or sell products or services. This may be in the form or commodities, securities, or other items. Markets allow buyers and sellers to meet each other. Financial markets contribute to the growth of international trade, capital raising, and transfer of various financial risks.
Budgeting
Budgets record the business entity's plan and may cover its aims, financial results, set targets, sources of funding, and investment level required to fulfill the planned objectives. While long term budgets span over 5 to 10 years, short-term budgets focus on the functioning of businesses during one financial year.
Investments
Thanks to investment, companies and individuals can buy assets and expect profit in a variety of forms, e.g. appreciation, interest, and income. Financial management and the management of risks also play role in investments. The well-thought assessment of an investment and ROI will yield positive results for the person or business involved. All fields of finance are interrelated. Any individual engaged in the different areas of finance usually has working knowledge of all other areas of finance.
Personal Finance
Personal finance focuses on the application of diverse financial principles to the financial decisions of a family unit or individual. It deals with how the money is obtained and how it is spent. The decision-making often times involves the elements of time and risk taking. Personal finance involves credit cards, personal loans, bank accounts, insurance policies, tax management, and personal investments.
Corporate Finance
Corporate finance focuses on the task of administering funds for the company's different activities. The application of financial concepts at this level intends to increase the company's overall value. Risk management is also brought into the equation by decision makers. All business entities deal with and try to predict potential risks. It is the management of these risks that determine whether or not a business entity will be ultimately successful on the market.
Financial Management
Finance covers three major areas: investments, financial markets and institutions, and investments. Financial management focuses on how a business entity or a person budgets or allocates financial resources in order to ensure a successful inflow of cash. This involves maintaining and administrating a person's or a company's financial assets. Financial managers are hired by companies to continuously assess the financial situation of the business enterprise and come up with profit generation strategies. Financial management is the task of one manager or a team of experts. There is a direct relationship between the competence of the financial manager and the cash flows of the company.
Financial Institutions and Markets
Financial institutions include banks, credit unions, insurance entities, and investment funds. These intuitions function as intermediaries between debt and capital markets and creditors and borrowers. They help facilitate the flow of cash from businesses, investors, clients, and many other entities. Financial institutions operate to provide financing to businesses, earning profit as part of the lending process. Financial entities aim at giving financial security to clients, using different tools such as savings and insurance policies. Financial markets provide a mechanism that enables people to purchase or sell products or services. This may be in the form or commodities, securities, or other items. Markets allow buyers and sellers to meet each other. Financial markets contribute to the growth of international trade, capital raising, and transfer of various financial risks.
Budgeting
Budgets record the business entity's plan and may cover its aims, financial results, set targets, sources of funding, and investment level required to fulfill the planned objectives. While long term budgets span over 5 to 10 years, short-term budgets focus on the functioning of businesses during one financial year.
Investments
Thanks to investment, companies and individuals can buy assets and expect profit in a variety of forms, e.g. appreciation, interest, and income. Financial management and the management of risks also play role in investments. The well-thought assessment of an investment and ROI will yield positive results for the person or business involved. All fields of finance are interrelated. Any individual engaged in the different areas of finance usually has working knowledge of all other areas of finance.
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Choosing between different financing solutions? Visit Dictionary of financial terms to learn how to make informed financial decisions.