Finance As a Specialized Field

Finance is the science of money or the economic activity concerning production, distribution, savings, income, expenditure, and allocation. Finance is the scientific study of the relation between a firm’s assets and liabilities and their interrelations. Finance is a very important field with applications in all areas of the economy. In layman’s terms, it is the art and science of managing money or wealth. Finance is divided into various branches: micro, macro, investment, fixed income and financial markets.

Micro accounting is the study of financial transactions involving cash flows in the company or between companies. It includes inventory, financing, trade, and purchases. The study of micro financial system generally involves short-term financing needs such as purchasing power, inventory, working capital, and short-term investments. In other words, the study of the financial system that concerns the movements of cash between companies.

Macro accounting is concerned with long-term financing needs. This includes capacity planning, long-term investments, macroeconomic indicators, and policy frameworks such as regulatory bodies and national banks. The third main area of financial activities is that of fixed income. Fixed income refers to financing, raising, and paying interest on a debt or portfolio of securities. Fixed income is one of the three main components of the corporate finance.

As already stated, corporate finance deals with the whole range of activities concerned with making financial decisions. It is the overall concern of any company, whether it is a small scale firm or a multinational corporation. A major portion of the total assets is invested in equities in the stock market, derivatives, commercial real estate, financial securities, and the list goes on. The main objective of corporate finance is to minimize risk, maximize return, and increase shareholder wealth.

A wide variety of approaches is used in corporate finance. Some of these include working capital management, venture capital, private money, public finance, and estate planning. These various approaches have different attributes but they all are aimed at providing a solid foundation for managing financial obligations of the company. While working capital management provides funding sources and an overview of available resources for working capital purposes, venture capital provides seed money for start-up ventures, public finance provides methods and programs for raising long-term debt capital, and estate planning facilitates the distribution of wealth.

While it is true that finance can be quite complicated, it is also true that there are plenty of people who are capable of handling the nuances of finance. For those who want to take on the challenge of understanding finance, they should first master the basic skills of bookkeeping, budgeting, debt management, money management, and banking. All these skills are taught in the MBA program. Once these skills are acquired, it is quite easy to understand finance, which is why this is considered to be one of the best graduate business schools. Graduates with a finance specialization earn a better salary and are more likely to get hired into top companies.

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Alison

Finance Blogger at Payday Jester
I have a passion for all things finance and business so if I can help you in anyway then please get in touch and if you have any comments or feedback please leave a message.

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