Question

In: Accounting

Talk about the importance of finances in the business world. Comment about the importance of finance...

Talk about the importance of finances in the business world.

Comment about the importance of finance for your profession.

Include references

Solutions

Expert Solution

Finance is a very important term for a business. Finance is as important for business as blood in our body. Without finance we cannot imagine a business or profession. Your business can be based on a idea and your profession can be based on your professional skills but you cannot took them in existence without finance. Before the start of mechanized era than small size businesses was exists, finance is not a big area, business manages its finance from its own sources than but as the size of businesses started to grow the finance is became vital for the business. In a big business format one person cannot manage all the finance so it invents various new ways of finance and format of business.

Finance can be both as internal and external. Internal finance consists of owner’s resource and they have limitations but external finance such as stocks, loans, debentures LOC, Notes is limitless and plays a important role in developing big business.

So business can be small or big but element of finance is exist there always. Without finance no business and profession can exists. To convert your business idea in to a reality you will always needs some resources such as land, labor, capital, building etc. can you imagine availing these resources without money. Off course the answer will be a big NO. So we cannot start a business without finance and it is the importance of finance for a business.

Finance can be of various types on various parameters such as short term finance for short term needs and long term finance for long term needs, finance from stocks for risk taking investors and finance on interest cost for risk averse investors.

Let’s think can we imagine a business or any profession account report without existence of bank account or account payables or common stocks or debentures etc. these all are sources of finance for a business so it proves that a business cannot run without finance.

Assume a business that wants to develop a big project that is out of its own sources, can it do it without finance the answer is no. so it is quite clear that how important is finance for a business and a profession.

Finance has played a very important role in evolving new business, developing existing businesses, running business by helping in short term financial problems.

For profession it is also important. A profession also cannot be run without resources like building, equipments etc and they also required finance as in business but the size of requirement of finance in profession can be small than a business. So finance are equally important in profession too.

Now we can say that finance is a major pillar of the business and profession on which they stands. Business as well as profession cannot be started without finance cannot be run without finance. So it is a blood for them and has biggest importance.     


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