Financing For Business – Part 2
Financing For Business – Part 2
Financial planning is a broad term for things about the science, development, management, and policy of finances and financial investments. The discipline of financial planning covers many different topics such as savings and investment, budgeting and debt, estate planning, investing in business, taxes, and even estate. The topic is broad and the scope is tremendous. This is one area of study that will always be in demand because people need to know how to manage their finances. Whether you are young or old, this is an important part of your life that needs to be planned properly. If you are going to get a good job with a good income then financial planning is an important skill that you must master.
Financial management is a discipline that you learn in a classroom that is supervised by professionals. For instance, a person getting a Master’s degree in Business Management would go into banking. A person getting a Master’s in Accounting would go into business accounting. These individuals can also open their own firm specializing in finance. A business on its own does not provide financial services; therefore, people looking for such services would do well to hire someone to manage their finances. This is where the role of banks and financial institutions comes in.
The main functions of financial institutions are to offer loans, buy securities (such as corporate bonds and corporate stocks), and invest in assets. They can also help with retirement plans like saving, investing, and distributing benefits to employees and retirees. In addition, they are institutions that work to improve the economy. They facilitate the movement of capital through lending programs. As for investment banks, they deal with the borrowing of funds by corporations and central authorities, the issuance of securities (such as corporate bonds and corporate stocks), and working to create economic policies that will benefit the whole nation.
The two main components of modern financial management are interest and capital management. Interest is what pays the interest on loans and makes sure that the financial management process goes on smoothly. Capital is what enables a corporation or company to produce its goods and services. Therefore, capital in itself is not necessarily a bad thing. However, excessive capital can inhibit growth, innovation, expansion, and overall financial welfare of a company or organization.
The first article in this series discussed the basics of financial economics. The second article looked at some of the most important areas, including theory and practice of financial economics. The third article looked at three related areas: investment risk management, corporate finance, and financial economics analysis. The fourth article looked at four more areas: political, legal, organizational, and behavioral issues. The fifth article looked at some current hot topics in financial economics, which are currently of increasing interest to both academics and layman alike.
This series has looked at some of the key players in modern financial management. They include investment banks, corporate finance managers, wealthy individual investors, government finance agencies, central banks, monetary authorities, international institutions, and creditors. In order to get global economic growth going again, these key players need to find new sources of growth-sustaining investment projects. One of the ways of doing that is through the commercial banking system. Other ways of getting the funds to such projects include borrowing from a variety of sources, including private lenders, issuing commercial paper, or using bank owned property as collateral.