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 the concepts of money and the risks involved in various 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 home unit or individual. In addition, personal finance studies the ways in which money is earned and spent. The decision-making often times involves the elements of time and risk. Personal finance deals with issues such as bank accounts, credit cards, personal loans, insurance policies, personal investments, and tax management.
Corporate Finance
Corporate finance explores the management of mutual funds for corporations and their activities. The application of financial concepts at this level intends to increase the corporation'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 company will be ultimately successful on the market.
Financial Management
Finance covers three major areas: investments, financial markets and institutions, and investments. Financial management deals with how a business entity or a person budgets or allocates funding in order to ensure a sufficient inflow of cash. This entails maintaining and administrating a person's or a business's financial assets. The companies hire financial managers to analyze the financial situation of the business and to come up with strategies to increase profit generation. Financial management can be performed by one person alone or a group of financial experts working as a team. There is a direct relationship between the competence of the financial manager and the cash flows of the company.
Financial Institutions and Markets
Financial organizations 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 ease the flow of cash from businesses, investors, clients, and many other entities. Financial institutions provide funding for entities that need it, and make money through earned interests. Financial entities aim at giving financial security to clients, using different tools such as savings and insurance policies. Financial markets provide the tools for people to buy and sell services and products. This can 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 and risk management is also important while making an investment. The careful ROI and investment analysis will bring positive results to the companies and individuals who venture in the field of investment. These areas of finance are all related to one another. Any person involved in the different areas of finance usually has working knowledge of all other fields of finance.
Personal Finance
Personal finance focuses on the application of diverse financial principles to the financial decisions of a home unit or individual. In addition, personal finance studies the ways in which money is earned and spent. The decision-making often times involves the elements of time and risk. Personal finance deals with issues such as bank accounts, credit cards, personal loans, insurance policies, personal investments, and tax management.
Corporate Finance
Corporate finance explores the management of mutual funds for corporations and their activities. The application of financial concepts at this level intends to increase the corporation'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 company will be ultimately successful on the market.
Financial Management
Finance covers three major areas: investments, financial markets and institutions, and investments. Financial management deals with how a business entity or a person budgets or allocates funding in order to ensure a sufficient inflow of cash. This entails maintaining and administrating a person's or a business's financial assets. The companies hire financial managers to analyze the financial situation of the business and to come up with strategies to increase profit generation. Financial management can be performed by one person alone or a group of financial experts working as a team. There is a direct relationship between the competence of the financial manager and the cash flows of the company.
Financial Institutions and Markets
Financial organizations 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 ease the flow of cash from businesses, investors, clients, and many other entities. Financial institutions provide funding for entities that need it, and make money through earned interests. Financial entities aim at giving financial security to clients, using different tools such as savings and insurance policies. Financial markets provide the tools for people to buy and sell services and products. This can 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 and risk management is also important while making an investment. The careful ROI and investment analysis will bring positive results to the companies and individuals who venture in the field of investment. These areas of finance are all related to one another. Any person involved in the different areas of finance usually has working knowledge of all other fields of finance.
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Choosing between different financing solutions? Visit Dictionary of financial terms to learn how to make informed financial decisions.
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