The term ‘finance’ has a wider concept that includes the science of managing the funds. It plays an important role in regular activities of an individual as well as a business. Finance can be categorized into various forms depending upon the area where it is being implemented. It includes business, personal and public finance and lending, borrowing and savings are also part of it. It plays a pivotal role in different sectors. Let’s find out what role finance plays in the following.
Corporate finance is related to all the financial decisions that a corporate identity takes and it includes analysis of credit, investments, procuring assets or selling them. Main aim of corporate finance is to manage the risks that area associated with investing in particular project and thus helping in maximizing the corporate value.
Apart from that, corporate finance also deals with long-term and short-terms financial decisions and its implication on the growth of business. Taxation, dividend to equity shareholders are all considered to be important aspect of corporate finance.
Other than corporate, finance has also important role in other type of business that includes sole proprietorship. It is considered as the blood of business that keeps the business rolling. Irrespective of the size of the business, finance plays an important role right from its incorporation to day to day activities. Even while expanding the business, first financial decisions are to be taken that whether the expansion can be funded or not and whether it will be profitable for the business or not.
Yes, finance also plays an important role in the personal life of an individual too. As an individual when you start earning it becomes important that you plan your finances properly so that you can invest in right way that will provide you financial stability. There are different types of investments that can be done and one who manages these investments and other financial aspects of their lives can manage their life properly.
While investing at any long term asset financial planning is necessary to find out if it will be beneficial in long run. All these things are to be considered and nothing is without finance. So, finance plays important role in individual’s personal life too.
Thus, whether it’s a small business, a corporate or an individual when something has identity, finance is playing some or other role to maintain that identity. It is the lubricant that keeps all the wheels running smoothly.