Introduction to Finance – Its Topics, Definitions, Business Finance

Finance is the key to deal how money is managed by individuals, businesses, and organizations to achieve their financial goals. It contains a wide range of topics, including investments, banking, insurance, real estate, and risk management. As one of the four core business functions, finance plays a vital role in providing. That all organizations have the necessary accounting systems in place.

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In the words of Bodie and Merton, “Finance is the study of how scarce resources are allocate over time.”

According to Guthumann and Dougall, “The activity concerned with planning, developing, managing, administering and increasing of the capital used for business purposes.”

John J. Hampton defines the term “Finance can be defined as the management of flows of money through an organization, whether it be a corporation, school, bank or government agency.”


According to E.W. Walker, “Activities of a business concern relevant to financial planning, coordinating, control and their application”

O. Ferrel C. and Geoffrey Hirt define, the term “Finance refers to all activities related to obtaining money and effective use.”

According to Schall and Halley, “Financing refers to the issues, policies, and theories related to the collection and use of funds by individuals, organizations, and governments.”

B.O. Wheeler defines, “Business finance is that activates which is concerne with the acquisition and conservation of capital funds in meeting the financial need and goal of business enterprise.”

L. G Gitman defines, “Finance is the art and science of managing money.”

Having a good understanding of financial records and accounts is important for managers to analyze and check the performance of a business. This information is use to make strategic decisions. And check business investment projects in financial terms. But, looking at numbers is not enough to understand a business. A qualitative approach is also necessary to understand how financial information can be use to add value, promote profit maximization and improve control within an organization.

Finance is not just about numbers, it also has a powerful impact on other business functions such as marketing, Human Resources (HR), and production. It plays a vital role in providing the financial health of a business. which can have a major impact on strategic decisions, ethical considerations, and the need for change.

Topics involve in Business Finance

Financial Statements Analysis

This involves analyzing financial statements such as the balance sheet, income statement, and cash flow statement to understand a company’s financial performance and make informed decisions.

Corporate Finance

This topic covers the financial activities of a company, including raising capital, managing risk, and making investments.

Investment Analysis and Portfolio Management

This deals with the process of evaluating and selecting investments. As well as managing a portfolio of investments to achieve financial goals.

Financial Markets and Institutions

This topic covers the various financial markets and institutions. Such as stock markets, banks, and insurance companies, and their role in the economy.

Risk Management

This topic deals with identifying, assessing, and managing risks. it could impact the business’s financials.

International Finance

This topic deals with the financial management of multinational corporations. And the impact of exchange rates, interest rates, and other global economic factors on business.

Mergers and Acquisitions

This topic deals with the process and financial analysis of merging or acquiring other companies.

Treasury Management

This topic deals with managing a company’s cash, and short-term investments and managing the financial risk of the business.

Financial Planning & Control

This topic deals with forecasting, budgeting, and controlling a company’s financial resources to achieve its objectives.

Corporate Valuation

This topic deals with the process of determining the value of a company and its securities.

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