Finance

• Finance


  The allocation of assets and liabilities over time under conditions, focus on money management
• Accounting


  A system of documentation and assessment of business's financial transactions
• Economics


  The allocation of resources and transactions in an economy
• Categories of Finance


  • Public or Government Finance
  • Corporate Finance
  • Personal Finance
• Public or Government Finance


  • Describes finance in relation to sovereign states and related public entities, encompasses how much money is allotted to the public
• Corporate Finance


  • Includes the earnings and expenditures of corporations, tools and analysis used in financial resources allocation
• Personal Finance


  • Comprises all the financial decisions and activities of a household or individual
• Areas of Finance


  • Financial Management
  • Financial Markets and Institutions
  • Investment
• Financial Management


  • The study of means of acquiring funds, managing working capital, and fund allocation for long-term investments
• Financial Markets and Institutions


  • The study of money markets (short-term debt) and capital markets (long-term debt and equity)
• Investment


  • The study of techniques used by individuals to manage portfolios and provide financial planning
• Internal Influences on Financial Objectives

  • Business Ownership
  • Size and Status of Business
  • Other Functional Objectives
• External Influences on Financial Objectives

  • Economic Conditions
  • Competitors
  • Social and Political Change
• Sources of Finance


  • Equity Shares
  • Preference Shares
  • Deferred Shares
  • No Par Shares
  • Depreciation Funds
  • Retained Funds
• Equity Shares


  • Also known as ordinary shares, real owners of the company and have control over the management
• Preference Shares


  • Have the right to get the dividend and retrieve the initial investment at the time of the company's termination
• Deferred Shares


  • Normally issued to the founders, founder shares, issued at small denominations to control over the management
• No Par Shares


  • Shares with no face value
• Depreciation Funds


  • Used to achieve the working capital requirements of the business concern
• Retained Funds


  • Done by accumulating the profits by a company for its expansion and diversification activities
• Financial Institutions


  • Provide long-term financial assistance to industrial concerns of business organizations, conduct financial transactions such as investments, loans and deposits
• Capital (Classical Economics)


  One of three factors of production, along with land and labor
• Capital (Finance and Accounting)


  The financial wealth used to start a business
• Kinds of Capital


  • Fixed Capital
  • Moving Capital
  • Natural Capital
• Fixed Capital


  • Essential to operate the business, but do not go directly to the product and is rather being used to make it
• Fixed Capital


  • Buildings
  • Machinery
  • Vehicles
• Moving Capital


  • Funds that are used for the business' operation, can be obtained through adding all the business assets minus its debts
• Moving Capital


  • Cash
  • Accounts Receivable
  • Inventory
• Natural Capital


  • Reference to a stock of natural resources used as utility
• Natural Capital


  • Land
  • Raw Materials
• Sources of Capital Funds

  • The Capital Markets
  • Loan Stock
  • Retained Earnings or Retention Surplus
  • Bank Lending
  • Lease
  • Government Assistance
  • Venture Capital
• The Capital Markets


  • New Share Issues/ Outstanding Shares, Right Issues
• Loan Stock


  • Long-term debt capital raised by a company
• Retained Earnings or Retention Surplus

  • Proportion of an enterprise's earnings that are usually used as investment or payment for debts
• Bank Lending


  • Short-term lending
  • Medium-term lending
  • Long-term lending
• Short-term lending


  • 3 years only
• Medium-term lending


  • 3-10 years only
• Long-term lending


  • Loan takes the form of mortgage
• Lease


  • The lessor agrees to transfer the ownership rights to the lessee after the completion of the lease period
• Government Assistance


  • Government provides finance to companies in cash grants and other forms of direct assistance