Question

‘The finance department of an enterprise performs several functions in order to achieve the
objectives. The scope of finance is very wide.’ Elaborate.

Answer 1

Ans ) Finance has a vide meaning , it is basically related to how an organisation acquire and utilises the funds in the allocation of assets and to ensure the highest return on investment.Finance is related to finding the sources of funds basis on the cost of capital and evaluating the projects basis on return and managing the cashflow of the organisation as well as budgeting and analysing the key financial statement figures to predict the income and expenses as well as allocation of the funds to the various departments like marketing , production, human resource and Research and development as per the accurate cost benifit analysis and also keeps an eye on the accounts department and perform working capital management.Finace as a decipline helps in deciding the right capital structure and also aids in dividend decisions.Alongwith helps to evaluate the debt - Equity ratio.Hence the scope of finance is as follows help to reduce the cost of finance which means finance as a decipline helps to reduce the the cost of funds as through the use of financial management tools like optimal capital structure theories.It also helps in the sufficient avalibility of funds to the business through the financial forcasting and budgeting.Financial management also helps in planning , organizing and controlling all the financial activities of an organisation.The other scope of finance is to assist top management in taking the investment decisions like where to profitabily invest to gain a higher return and to help the management to increase shareholders net worth through sound dividend policies.The finance is the life blood of an organisation hence it ensures that the fund flow is proper and regular within various departments of the organisation.