76 views; Posted on April 15, 2019
MUHAMMAD SHAMAUN IDRIS
Concordia College, Yola. No 2 Jereng Road Karewa Extensions Jimeta/Yola, Adamawa
Phone: 08035409173, 08051640165, 08029014256
Finance is the elixir that assists in the formation of new businesses, and allows businesses to take advantage of opportunities to grow and to employ local workers and in turn support other businesses and local, state and federal government through the remittance of income taxes. The strategic use of financial instruments, such as loans and investments is key to the success of every business. Financial trends also define the state of the economy on a global level, so central banks can plan appropriate monetary policies.
Finance is a field that deals with the study of investments. It includes the dynamics of assets and liabilities over time under conditions of different degrees of uncertainties and risks. Finance can also be defined as the science of money management. Finance aims to price assets based on their risks level and their expected rate of returns. In other words, finance can be described as the study of fund management and asset allocation over time.
Funds consist of money and other assets. There are many different types of finance, but all are fundamentally concerned with studying how best to allocate assets in different conditions over time which is correlated to businesses. Finance is necessary for many businesses. Stock exchanges often require a minimum share value and company size before a company's shares may trade on the exchange. Since the business owner cannot sell shares of a company to the public, the owner must borrow money from banks and other sources to finance the expenditures of the business.
Every business owner has a vision for his company, and that vision is frequently manipulated by managing and prioritizing the use of financial resources. Given a certain amount of finances, a company’s financial objectives and anticipations guide how it spends the business funds. For example, a company’s immediate goal may be to increase sales by financing discounts, or it may have a long-term goal of expanding the manufacturing capacity for lower average costs. If the company draws most of it finances from loans, repaying the principal amount and interest should be a concern. If it obtains financing from their investors’ money, giving them the best possible returns must be a key objective.
Just mentioned few, are the key roles of finance and without it the company may not survive the competitive environment in which it operates. Because of the versatility of finance that’s why there is a need to centralize its relevant combination from double majors to various professional fields of study into one Faculty. The Faculty if considered will include; Financial Accounting, Financial Banking, Finance Management, Treasury Management, Taxation, Oil & Gas Accounting, Tax Management, Forensic Accounting, Audit & Investigation, Public Sector Accounting, Cost & Management Finance, Financial Economics.
FUNCTIONS IN FINANCE
Finance is the process of creating, moving and using money, enabling the flow of money through a company in the same way it facilitates global money flow. Money is created by the sales force when they sell the goods or services the company produces; it then flows into production where it is spent to manufacture more products to sell. What remains is used to pay salaries and fund the administrative expenses of the company.
The flow of finance starts on Wall Street with the creation of capital used to fund business through the issuance of common stock to provide capital, bonds to lend capital and derivatives (packaged group of securities that help to hedge against financial risk and replace the money banks lend out to borrowers). Public companies and municipalities use this capital to help fund their operations, and banks use it to lend to companies, municipalities and individuals to finance the purchase of goods and services.
When much finance processes break down, the government or private companies go out of business and the economy moves into recession. For example: If a major bank loses a significant amount of money and faces the risk of insolvency, other banks and corporate customers will stop lending or depositing money to the problem bank. It will then stop lending to its customers and they will not be able to purchase the goods or pay the bills for which they were seeking funding. The flow of money throughout the financial system slows down or stops as a result.
All facets of the global economy depend upon an orderly process of finance. Capital markets provide the money to support business, and business provides the money to support individuals. Income taxes support federal, state and local government. Even the humanities benefit from the financial process because they draw their money from corporate sponsors and individual patrons. Capital markets create money, businesses distribute it, and individuals and institutions spend it. In view of these, the purview of finance needs to be expanded in order to cater for the growing professional requirements.
4. Jump up^ Board of Governors of Federal Reserve System of the United States. Mission of the Federal Reserve System. Federalreserve.gov Accessed: 2010-01-16. (Archived by WebCite at Archived 2010-01-16 at WebCite)
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8. Oklahoma State University, Journal of Extension; "Small Businesses and the Community: Their Role and Importance Within a State's Economy"; Glen Muske, Michael Woods, Jane Swinney, Chia-Ling Khoo; February 2007