Business Finance means the funds and credit employed in the business. Finance is the foundation of a business. Finance requirements are to purchase assets, goods, raw materials and for the other flow of economic activies. Let us understand in-depth the Meaning of Business Finance.
meaning of bussiness finance
According to B.O. Wheeler Meaning of bunisses finance includes those business activities that are concerned with the acquisition and conservation of capital funds in meeting the financial needs and overall objectives of a business enterprise.”
Business is identified with the generation and circulation of products and services for fulfilling of needs of society. For successfully doing any operation, business requires money which is known as business finance. Therefore, funds are known as the lifeblood of any business. A business would not function unless there is adequate money accessible for use.
The capital contributed by the businessman to establish the business isn’t adequate to meet the financial needs of the business. Consequently, the businessman needs to search for an option to generate funds. A research of the financial needs and options to fulfill those needs must be done with a specific end goal to arrive at effective financial management to maintain the bussiness
Importance of Business Finances
We now know the meaning of Business Finance, let us learn its importance. Business finance is an essential requirement for the establishment of any business.
We require business finances to meet certain contingencies and any unexpected problems that may arise
Ans: This statement is False. All companies whether big or small require finance for manufacturing, trading, running costs, etc.
A requirement to avail any business opportunities that may present themselves
Only large companies require business finance. True or False?
Process of Financial Planning
- Preparation of sales conjecture.
- Decide the number of funds – fixed and working capital.
- Conclude the expected benefits and profile ts to decide the number of funds that can be provided through internal sources.
- This causes us to evaluate the requirement from external sources.\
Importance of Financial Planning
Financial Planning is the procedure of confining company’s targets,
Financial Planning supports development and expansion programmes which support in the long-run sustenance of the organization.
Diminishes vulnerabilities with respect to changing business sector patterns which can be confronted effortlessly through enough funds
. Financial Planning helps in diminishing the vulnerabilities which can be a deterrent to the development of the organization. This aids in guaranteeing security and benefits of the organization.
Objectives of Financial Planning
- Ensuring availability of funds: Financial planning majorly excels in the area of generating funds as well as making them available whenever they are required. This also includes estimation of the funds required for different purposes, which are, long-term assets and working capital requirements.
- Estimating the time and source of funds: Time is a game-changing factor in any business venture. Delivering the funds at the right time at the right place is very much crucial. It is as vital as the generation of the amount itself. While time is an important factor, the sources of these funds are necessary as well
Financing Decision
Decisions, decisions. Running an organization must involve taking thousands of decisions a day as you can imagine. The decisions that have to be taken with respect to the capital structure are known as Financing Decision. Let us learn a bit more about the types of financing decisions.
Dividend Decision
Importance of Financial Planning
Financial Planning supports development and expansion programmes which support in the long-run sustenance of the organization. Diminishes vulnerabilities with respect to changing business sector patterns which can be confronted effortlessly through enough funds. Financial Planning helps in diminishing the vulnerabilities which can be a deterrent to the development of the organization. This aids in guaranteeing security and benefits of the organization.