The process by which money is transferred among businesses, individuals, and governments. Is the study of how people allocate scarce resources over time

Finance

Done by: Avazov Ibrohim from SSST-71 group
Accepted:Shodmonbekova Kamola

FINANCE

The process by which money is transferred among businesses, individuals, and governments.

Is the study of how people allocate scarce resources over time.

• Is the study of how people allocate scarce resources over time.
• Is the process by which money is transferred (financing and investing) among businesses, individuals and governments.

What is Finance?

Finance is the study of how to make good decision that involve money:

• What assets to buy?
• How to pay for assets you buy?
• How much cash to keep on hand?

Areas of Finance:

• Corporate (Business or Managerial) Finance
• Personal Finance
• Invetsment & Portfolio Management
• Financial Markets and Institutions
• Public Finance

Two Pillars of Finance:

Almost everything in Finance revolves around these two concepts:

• Risk
• Return

Characteristics of finance:

• Monetary characteristics
• Distributive characteristics
• Purpose of funds

Financial news:

• Dell Computer expands its product line
• The Gap builds additional stores
• Nike closes a production plant in Asia
• Du Pont restructures its chemicals business
• Ford Motor Co. borrows $3 billion
• Motorola acquires a company in Japan
• Perot Systems issues stock

valued at $3 billion

Financial Managers

• Financial managers are responsible for deciding how to invest a company`s funds to expand its business and how to obtain funds (financing).
• Financial management (managerial finance)- the actions taken by financial managers to make financial decisions.
• Chief Financial officer- the officer who makes the key financial decisions of a firm.

Integration of Finance Function with Other Business Functions.

$ $

$ $ Firm obtains Funds

$ $

Firm Firm

Invests Invests

Funds Information Funds

Flow

Information Information

Flow Flow

Investors
Finance
Function
Production
Function
Information
Systems
And
Accounting
Marketing
Function

Financing Decisions by Financial Managers

• Debt financing
• Debt securities
• Equity financing
• Equity securities

Debt Financing

• The use of borrowed funds to finance investments.

Equity Financing

• The use of funds obtained in exchange for ownership in the firm to finance investments.

Financial Markets

• Financial Markets represent forums that facilitate the flow of funds among investors, firms, and government units and agencies.
• The Eguity Market facilitates the sale of equity by firms to investors or between investors.
• The Debt Markets enable firms to obtain debt financing from institutional and individual investors or to transfer ownership of debt securities between investors.