Business, Legal & Accounting Glossary
The concept of finance depicts the interrelation of time, capital, and risk. Finance plays a vital role in every aspect of business. Right from production to distribution, finance is needed everywhere. Thus a correlation exists between finance and the economy.
Personal finance is associated with the monetary behaviour of any individual or several individuals in a family. Personal finance deals with the ways in which an individual or a family acquires, saves, and spends monetary resources over time. It also takes into account various financial risks and life-related events. Various components that constitute personal finance include monitoring savings account, loans, credit cards, various investments especially in the stock market, retirement plans, insurance plans including both general and life insurances, and income tax management.
Corporate finance deals with financial decisions of corporate houses. The tools and various analysis used by corporate houses to carry out financial decisions all come under corporate finance. Aim of corporate finance is to maximize the corporate value with firms’ financial risks acting as constraints.
Finances that are needed over a long period of time are known as long-term finances. Long term finances are needed to expand certain projects by opening a new plant or buying another company. There are several types of long term finances like shares, venture capital, government grant, bank loans, mortgage, retained profit, selling assets, and lottery funding.
When there is a shortfall in working capital, short-term finances are required. Short term finances can be obtained in the form of bank overdrafts, commercial bills, and debtor finance.
Finance that is required for a period ranging from 3 to 10 years is medium-term finance. This type of finance is generally used for financing various business-related equipment, business expansions, and mergers. The medium-term finances can be obtained in the form of term loans and leasing.
Finance can be obtained from various financial institutions. There are several banks and other financial institutions that provide business financial services. There is other private venture capital providing organizations that provide finances like syndicated funding and venture capital companies. There are other government programs also that aid in providing finances.
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This glossary post was last updated: 11th August, 2022 | 0 Views.