Question

What is finance? Briefly discuss how the study of finance is essential to business today. There are other areas of business, such as marketing, human resources, and management. How does finance impact them? In other words, can a business efficiently run without everyone having some knowledge of the field? Explain.

Answer 1

In simple terms, finance is the art of managing money. It is the creation, management, distribution and study of money, assets, investments and financial instruments. Finance is and has always been an integral part of business. Creation of wealth is the primary motive behind any business. Creation and management of wealth through various investments, the actions taken by managers to maximize said wealth and the distribution of returns amongst the different sources of funds, are all covered under the broad spectrum of study of finance.

All other areas of business are impacted directly or indirectly through finance.Every decision made in the business takes into consideration the financial aspects of it. How much money is needed to invest in a certain project, what the returns might be, is there any risk in investing in the said project, how and from where the funds would be arranged, is the project a viable investment and many such questions arise in taking business decisions. A manager with sound financial knowledge can find solutions to such problems and optimize the resources in business.

A business cannot run efficiently without everyone having some knowledge of finance. Finance is one of the most important fields in business. The study of finance is needed in every area of business, be it marketing, human resources or management to make better decisions that would make sure that the firms's resources are optimized and returns maximized.