Finance is a discipline that deals with the management of money. It includes various activities, such as budgeting, investing, and borrowing. These activities are undertaken by businesses and governments.
Finance is based on theories that explain financial behavior. The theories are derived from mathematical and scientific concepts. Financial theories also draw heavily on science laws. There are a variety of subfields within finance, including public, corporate, and managerial finance.
Finance is an essential aspect of any business or organization. Without proper financing, an economy cannot function. Businessmen and individuals need external sources of money to carry out their daily transactions.
Finance helps business concerns make wise decisions and plan their finances. This allows them to maximize the value of their assets. In addition, it also makes companies grow.
Since the industrial revolution, organizations have found it difficult to acquire the funds they need. They now require a dedicated finance system to help them operate smoothly.
Finance also helps governments use their funds effectively. Governments have the right to collect and use finances within their constitutional limits.
However, finance is not only a science, it is also an art. While academics and experts in the field have studied the origins and development of finance, they have discovered many anomalies and improvisations.
A few centuries ago, finance was mainly concerned with the procurement of funds. Businessmen were more concerned with production. As a result, the scope of finance’s function was narrower.
However, in the modern era, the scope of finance’s function has expanded. Today, organizations need finance to acquire assets and tools. Furthermore, finance is also needed for production and development projects.