Role of Finance in a Firm
Finance is the lifeblood of business Apart from institutions, various government, non-government and international organizations require money to run. Financial management is said to be the heart of the overall management of all business organizations. Finance is very important in today's competitive world.
Finance plays a very important role in the firm. For example:
1. Initial cost:
The cost incurred in starting or forming a business is called the initial cost. A large amount of money is required for expenses. This required money is provided from the business finance.
2. Purchase of Fixed Assets:
Without fixed assets i.e. land, buildings, furniture, etc. it is impossible to run a business. A lot of money is needed to purchase fixed assets.
. Purchase of Current Assets:
To operate a business organization, fixed assets need to be purchased to keep the current assets operational. All expenses related to the purchase of current assets are met from the financial resources of the business.
4. Running Costs:
Expenditure incurred for running the day-to-day operations of a business is called current expenditure. For example purchase of raw materials, rent, water, electricity, advertising, etc. current expenses. Such expenses are collected from business financing.
5. business expansion:
The increase in the demand for manufactured goods results in the expansion of the business. Expansion of the business requires a lot of money, this money comes from financing the business.
6. Achieve key objective:
Business is conducted fa or the purpose of making a profit. More money is needed to achieve this objective.
7. Sale of goods on loan:
, in a competitive market, traders sell goods on loan. It needs more money.
It has importance in all areas from starting up a business to bankruptcy.
To operate a business organization, fixed assets need to be purchased to keep the current assets operational. All expenses related to the purchase of current assets are met from the financial resources of the business.
4. Running Costs:
Expenditure incurred for running the day-to-day operations of a business is called current expenditure. For example purchase of raw materials, rent, water, electricity, advertising, etc. current expenses. Such expenses are collected from business financing.
5. business expansion:
The increase in the demand for manufactured goods results in the expansion of the business. Expansion of the business requires a lot of money, this money comes from financing the business.
6. Achieve key objective:
Business is conducted fa or the purpose of making a profit. More money is needed to achieve this objective.
7. Sale of goods on loan:
, in a competitive market, traders sell goods on loan. It needs more money.
It has importance in all areas from starting up a business to bankruptcy.
.
0 Comments