What Do You Know About Finances

Getting To Know More About Finance

Every business is generally requires proper financing and thus the reason why finance is very crucial to every business organization. Finance generally deals with many different fields one of them being promoting of the right 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. Finance greatly contributes in making sure that the company does nit only achieve its goals but also achieve them in an orderly manner as well as optimally. There are however some important decision that without adequate finance in an organization they would end up be unpractical. These decisions are therefore referred to as financing decisions of a business.

Investments are some of the major things that most of the businesses across the world focuses on as they promote the general growth of a business and thus the importance of financing decisions as they help an organization determine when, where and how to get the required amount of funds to promote and meet all the investment needs that the organization has. Finance related decisions however are found in various categories. Below are some of the major finance related decisions which are very crucial to a business.

The first category of finance decisions are the various investment decisions.

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. Dividend decisions are other category of finance decisions. These finance decision category guides the firm on whether to distribute all its profits or otherwise retain them or even distribute a portion of the profits and 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. The second source of finance is the quasi equity which is provided by the quasi owners or the preference shareholders of a business. A business can also get its money from debts and debentures.

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