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Finance Management-Explanation,Types,Goals,Functions and works

Financial Management

Finance and Financial Management

In today's world for live better lives we have must sufficient money or this money earn by job, business, and profession. The income earns by us we enclosure day to day life after spending all expenditure we save some money call as saving. Now how to invest this save money for a better future life for that best suggestion is gives by FINANCE and how can we financial management.


Now we will get deep information about what is finance and financial management also discuss the financial system and types of finances.

Don’t miss this information keep learning.

Let’s Discuss each of them One-By-One.



What is Finance?

Finance is basically a financial management system that manages we save money in the form of investing, borrowing, lending, budgeting, saving, and forecasting.

Related some important points related to finance

Finance is related to

     1. Finance is the study of financial planning, asset management, and fundraising for businesses and financial institutions.

      2. Accounting, which provides data in financial statements?

      3. Economics provides Decision-making tools such as pricing theory (supply and demand), risk analysis, comparative return analysis.

     4. Information on the economic and financial environment in which the company operates.

     5. In finance, major terms include banking, leverage, debit, credit, or capital marketers.

     6. It represents money management and the process of acquiring.

     7. Money, Banking, debts credit lone make finance systems.


So these are some important points related to finance.

Sound good let’s move forward.

Must Read:- Top 15 Financial Education Blog

One of Mine


Now we will discuss financial management.


What is Financial Management?

Financial management is an activity like planning, organizing, directing, and controlling the financial activities of an organization.

Here I Provide some important points related to financial management.

      1. Financial management (or Business Finance) is concerned with managing a corporation’s money. For example, a company must decide.


    1.Where to invest its money.

          2.Whether or not to replace an old asset.

    3. When to issue new stocks and bonds.

       2.Concerns the acquisition, financing, and management of assets with some overall goal in mind.

       3. It maintained cash flow in the short term.

       4.  It maximizes the wealth of shareholders.

       5. It minimizes the capital cost of the organization and helps in operation to gain more profit.

       6. It is very important to survive and run an organization.

       7. It also Analyzes the financial or capital structure.

        8. It provides Accurate Financial Reporting.

       9. Its aim is to provide financial service to the whole enterprises.

      10. It is a specialized branch of general management.


Those are the basic points related to financial management.




The Financial system

      1. The financial system is complex comprising many different types of private-sector financial institutions, all of which are heavily regulated by the government.

      2. A well-structured financial system facilitates avoiding frequent financial crises.

       3. A financial crisis is characterized by a sharp decline in asset prices and the failure of firms.

       4. Financial institutions that provide services to clients. They act as a middleman between clients and borrowers.

      5. Public Banks, commercial Banks, central Banks, co-operative Banks are the part of Financial Systems.

      6. Non-Bank Financial institutions like Finance and loan companies, insurance companies, mutual funds, commodity traders are also parts of financial parts.
There are some parts of the financial systems.
1. Money
2.Financial Instruments
3. Financial Markets
4. Financial Institutions
5. Central Banks

Let’s discuss them.

Money

An asset used to pay for the purchase, repay of debt, pay, taxes.

          · A store of wealth.

          · A Medium of Exchanges.

Financial Instruments

Contracts used to transfer wealth from servers/lenders to investors/borrowers and to transfer risk to those best equipped to bear it.

Financial markets

Allow us to buy and sell financial instruments quickly and cheaply Funds are transferred from people who have an excess of available funds to people who have a shortage of funds.

Financial institutions


Firms that provide access to financial markets.

Central Banks


           ·  Monitor and stabilize the company.

           ·  Monitor financial institutions.

After know all these terms let’s move forward and learn about types of finance.



Types of Finance

Finance is a wide area and it can be thought in different contexts like

           ·  PERSONAL CONTEXT

           · GOVERNMENT CONTEXT

           ·  BUSINESS CONTEXT

Personal context

If you think about finance it is the management of money for the personal objective for example if you are thinking about personal finance perhaps you will think about

        1. How to earn an adequate amount of money.

        2. How much money to spend and save.

        3. How much to borrow.

        4.  How much money to invest.
   
        5.  When to invest the money.

       6.  It managed your saving and investment.

       7.  It will help with your child's college education.

       8. Personal Finance totally depends on income, expense, living requirements, and goals.

       9.  It provides financial service or household advice.

So these are some examples of questions that you answer if you are dealing with personal finance.

Government context

       1. Generating government revenue e.g. by deciding how much to tax.

       2. Public spending-it is money spent by government entities.

       3.Budgeting.

       4. Government Debt.objectives

       5. Production and distribution of public goods.

       6. The government is going to spend money on defense, education, healthcare, etc.

       7. IN the government context taxes like Direct and Indirect tax and all major taxes are included.

       8. Its impacts on the economy.


2017 example:

Revenue was approximately $3.3 trillion

Spending was $3.97 trillion

The deficit was $665 billion


So these are some examples of questions that you answer if you are dealing with government context.

Business context

     If we think about the business context of finance then it will be dealing with for

       1. In what fixed assets to invest.

       2. How to raise money for the investment.

       3. How to manage short-term cash flows.

       4.  How much to re-invest in the business if you want to expand the business.

       5. It is a process of rising, providing, and managing all the money to be used in connection with business activities.

       6. It encompasses finance of

       7. Sole proprietary organizations, partnership firms, and corporate organizations.

       8. It should be remembered that the same principles of finance apply to large and small organizations, proprietary and non-proprietary organizations.
So these are the different types of contexts of Finance.

Conclusion:

So these are all about basic knowledge of finance and how the financial management done in simple words if we define the Finance is the science and art of managing money to achieve the appropriate objective.

So, friends, I hope you have got some value able information about finance and how we can financial management.

NOTE:-Taxinvestcare advised you to do all kinds of activity related to investments in the presence of experts. 


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