What is the role of Finance in the current world?
Asslam Alaikum friends today we will
discuss a new topic which we call finance and business. We can also call it
managerial finance. We will discuss this as Managerial Finance, we can call it,
so first of all we will discuss what is finance and discuss its front talk, and
then we will do its introduction. What is finance if I call to finance the
building of business business in any business finance plays the role of
building as important as a human resource or what is inside a human being. As
much as the blood is needed, it will be necessary for the business.
Role of Business in the current world?
Any business that is done discusses
business finance then what is business any activity that is done to earn profit
we call it business. It can be small, it can be large, it can be private and it
can be public. So, what do you need for this? If you need finance, then what
will be the finance? How can you manage your money, how can you utilize it and
how will you invest? Will do it in a way. We will understand this from a
different point of view, so let us discuss the science and art of managing
money. If I look at it, we will view it in two contexts, one is finance at its
personal level and the other is within the business context, the personal context,
within business context, what the role of finance, finance cases, well, an
individual who the design takes the individual point of view of how finance
will play a role. First of all, how will they spend their money, which is
called managing finance?
Second is how he will save the money.
Understanding Finance By understanding finance we will know how an individual
will invest his money, how he can spend it, and how he can save it is most
important. Point out how he will invest his savings, where he should invest,
where he will gain profit, where he has chances of loss, where he should avoid,
and where he should take risks. Then we look at it in the business context,
what it focuses on in the business context, it will tell you that it is a business,
from the point of view of the investor’s business, finance will tell us that.
How do we get our money from the investor? If you want to invest money
somewhere to make an investment, how can you borrow money from people, where
will the money come from, will you take a loan from the bank, will you take a
loan from your friend or will you sell shares?
The goal of the Firm;
- To create value for the firms’ legal
owners - To maximize shareholders’ profit
- Maintain liquidity and proper
utilization of funds
Role of finance in
business;
- Where to invest (capital budgeting
decision) - How to raise money to fund the
investment (capital structure decision) - How to manage cash flow from daily
operations (working capital decision) - Major Areas of Finance;
Financial Services:
Concerns with the design and delivery of
advice and financial products. (for example- Banking, real estate and
insurance)
Managerial finance:
- Financial affairs Develop financial
plans. - Financial Services and Managerial
Finance:
See how these services can be provided:
A bank is providing financial services to you an insurance company is providing
you with advice and insurance facilities Selling a financial product Yes and
what you have is real estate so all this concerns the design
and delivery of advice and financial products ok so financial products are
being delivered to you so this concerns financial services for example banking
Real estate and in insurance, etc.
Managerial Finance:
After that, you have another type. Well,
now from its name, you must be thinking that the manager who performs the
activities of a company manager, where are they all within managerial finance?
In this, you have administered the corporate affairs, whatever the problems of
the corporate-related business, the manager deals with all of them, and in the
managerial activities, they go, develop the financial plan, and the financial
plan is also made on it. That the manager is making, OK, so all these
managerial finance-related activities, they go into managerial finance and into
financial services, the financial vegetable that we’re delivering, which is
upselling our products. Take out designing, giving someone a piece of advice,
so these two types of activities that I have mentioned here can be performed
within the major area of finance, so it was basically, an introduction to business finance.