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Finance is a branch of economics concerned with allocations well as resource management, acquisition and investment. Finance is the science of funds management. Simply, finance deals with matters related to money and the markets. Finance is the science of the management of money and other assets. Finance is the process of channeling funds from savers to users in the form of credit, loans, or invested capital through agencies including commercial banks, savings and loan associations, and such nonbank organizations as credit unions and investment companies. Finance can be divided into three broad areas: business finance, personal finance, and public finance. All three involve generating budgets and managing funds for the optimum results. Finance includes saving money and often includes lending money.
Finance is simply "the management of assets". This applies to debt and equity securities as well as many more. An example of this is that in debt securities the finance serves the wants and needs of individuals and organizations. Someone with surplus cash wants to make a return off this money, while someone wants to build a business but has no money to initiate it. By issuing this surplus money in the form of a loan to the person who requires it (borrower) that individual can start his business, while the issuer will receive reimbursements through his loan, this forms the basis of a simple financial transaction. Investment decisions are important because the primary source of a company’s value is the cash flows generated by its assets. By comparison, the financing decision is less important but it can also have important effects on investment decisions. However given the primacy of investment decisions, it seems sensible to suggest that a company’s financing strategy should be designed to complement and support its investment strategy.Companies can get external finance for their business through a number ways including borrowing (Debt), issuing ordinary shares and by issuing preference shares. The difference between these methods are significant in terms of risk, required rate of return, tax treatment , voting rights attached, and priority of repayment in the event of liquidation.
Personal financial planning consists of general activities like controlling your day-to-day finances to enable you to do the things that bring you satisfaction and enjoyment. Choosing and following a course toward long-term financial goals such as buying a house, sending your kids to college, or retiring comfortably. Building a financial safety net to prevent financial disasters caused by catastrophic illnesses or other personal tragedies. The management aspect comes into play where you may start to concern yourself with taxation, ownership, distribution of income and possibly endowments to charities or other non-profit institutions.
Public finance is a field of economics concerned with paying for collective or governmental activities, and with the administration and design of those activities. The field is often divided into questions of what the government or collective organizations should do or are doing, and questions of how to pay for those activities. The broader term, public economics, and the narrower term, government finance, are also often used. Public Finance Management (PFM) basically deals with all aspects of resource mobilization and expenditure management in government. Just as managing finances is a critical function of management in any organization, similarly public finance management is an essential part of the governance process. Public finance management includes resource mobilization, prioritization of programs, the budgetary process, efficient management of resources and exercising controls.