We hear the word finance in our day-to-day lives. What exactly is finance? Where can one obtain finance from? What are the types of finance that are available? What are the pros and cons in adopting the various types of finance? How do you manage finance? What are the requirements of a financial manager etc are some of the many questions to which we seek answers.
Now, finance as we all know is money. It is the money that is required by the companies and various other organizations to start their business as well as to carry on their functioning. Finance is required for both short-term requirements as well as long-term requirements. Short-term finance is mainly needed in order to fill the working capital requirements. Long-term financial decisions are also called capital budgeting decisions. This refers to the finance required for long-term projects such as expansion, installment of a new program, research and development etc. Thus, capital is required in every stage. In order to raise capital for their survival, businesses are given two options. One is to raise money through the issue of share capital, and the other is by the borrowing funds. This method of raising capital is also called debt capital. There are many important aspects that are to be kept in mind before you decide your choice of capital. Financial management deals with the proper and accurate management of funds within the organization in order to generate maximum returns and thus maximize shareholders wealth. Few of the main aspects that are to be remembered before choosing the type of capital are;
* The total amount of funds that is to be raised
* The control criteria
* The interest rates
* The opportunity cost
* The market conditions
* Level of risk that is to be undertaken
* Bank rates and other rates etc
Many business firms make their capital
All the above queries and much more are answered in the various books about Finance as well as Financial Management. These books are easily available at the various book stores, as well as they can be purchased online, by placing your order and other requirements such as authors name, edition number etc. These books are very informative and make you aware and see money and the ways by which it can be raised, in a completely new perspective.