Getting To Know More About Finance
Finance is very important to the growth of any type of a business. Finance is generally more involving in the study of financial management. In a layman’s language, finance mainly deals with various financial resources in an organization where it includes all the management activities, all the planning and the allocation activities done to these financial resources in the business for the purposes of helping the business or the firm achieve its major goals and objectives. One of the major reasons why finance is very important in any business organization is because it helps the organization work towards its set objectives and thus achieving them in a maximum way. There are however some important decision that without adequate finance in an organization they would end up be unpractical. These are simply the various financing decisions in an organizations.
One of the major things that various finance related decisions deals with include the various ways that can help a business get the right amount of cash or money, where to get the money from as when to get the cash from which the company or the firm needs in order to meet all its investment needs. Finance related decisions however are found in various categories. Some of the critical financing decisions in an organization are discussed below.
The first common finance related decision which is very important to a business organization is the investment decision.
Generally, the investment decisions mainly involve allocating various funds or money to some assets which are long term to promote better results or yields in future. The other type of finance decision that can also help a business achieve its investment goals is the dividend decisions. The dividend decisions category of finance decisions in an organization help a business to know whether the business should distribute all its profits to various investments or not or whether it should only distribute a portion of the profits or retain the balance. There are also liquidity decisions types of finance decisions. These are finance decisions that help a business covert the various assets or invested properties into hard cash.
However, a company can generate its finance from various sources. Below are some of the major sources if finance that any business can raise its funds from. The first source of finance is the equity finance which is provided by the real owners of the businesses or the ordinary shareholders in a business. Quasi equity provided by the preference shareholders in a business is the other source of finance. A business can also get its money from debts and debentures.