Business concern needs finance to meet their requirements in the economic world. Any
kind of business activity depends on the finance. Hence, it is called as lifeblood of business
organization. Whether the business concerns are big or small, they need finance to fulfil
their business activities.
In the modern world, all the activities are concerned with the economic activities and
very particular to earning profit through any venture or activities. The entire business
activities are directly related with making profit. (According to the economics concept of
factors of production, rent given to landlord, wage given to labour, interest given to capital
and profit given to shareholders or proprietors), a business concern needs finance to meet
all the requirements. Hence finance may be called as capital, investment, fund etc., but
each term is having different meanings and unique characters. Increasing the profit is the
main aim of any kind of economic activity.
MEANING OF FINANCE
Finance may be defined as the art and science of managing money. It includes financial
service and financial instruments. Finance also is referred as the provision of money at the
time when it is needed. Finance function is the procurement of funds and their effective
utilization in business concerns.
The concept of finance includes capital, funds, money, and amount. But each word is
having unique meaning. Studying and understanding the concept of finance become an
important part of the business concern.
DEFINITION OF FINANCE
According to Khan and Jain, “Finance is the art and science of managing money”.
2 Financial Management
According to Oxford dictionary, the word ‘finance’ connotes ‘management of money’.
Webster’s Ninth New Collegiate Dictionary defines finance as “the Science on study
of the management of funds’ and the management of fund as the system that includes the
circulation of money, the granting of credit, the making of investments, and the provision
of banking facilities.
DEFINITION OF BUSINESS FINANCE
According to the Wheeler, “Business finance is that business activity which concerns
with the acquisition and conversation of capital funds in meeting financial needs and overall
objectives of a business enterprise”.
According to the Guthumann and Dougall, “Business finance can broadly be defined
as the activity concerned with planning, raising, controlling, administering of the funds
used in the business”.
In the words of Parhter and Wert, “Business finance deals primarily with raising,
administering and disbursing funds by privately owned business units operating in nonfinancial fields of industry”.
Corporate finance is concerned with budgeting, financial forecasting, cash
management, credit administration, investment analysis and fund procurement of the
business concern and the business concern needs to adopt modern technology and
application suitable to the global environment.
According to the Encyclopedia of Social Sciences, “Corporation finance deals with
the financial problems of corporate enterprises. These problems include the financial aspects
of the promotion of new enterprises and their administration during early development,
the accounting problems connected with the distinction between capital and income, the
administrative questions created by growth and expansion, and finally, the financial
adjustments required for the bolstering up or rehabilitation of a corporation which has
come into financial difficulties”.
TYPES OF FINANCE
Finance is one of the important and integral part of business concerns, hence, it plays a
major role in every part of the business activities. It is used in all the area of the activities
under the different names.