DISCIPLINES OF FINANCE

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Disciplines of Finance can be split into two main types, those that relate to business and those that relate to personal finance. Business finance disciplines include financial analysis, financial accounting, and corporate finance. Personal finance disciplines of finance include personal financial planning, money management, and investment. Below are some finance disciplines.

Financial Analysis

This area of finance is concerned with analyzing the relevant information from accounting to make good business decisions. This information should lead to the correct decision whether it is expanding or closing down part of its business activities depending on certain factors such as the cost involved in expanding or overheads incurred. The financial analyst is responsible for providing this information to the business.

Financial Accounting

This area of finance involves measuring and reporting the fund flows concerning an organization’s investments, creditors, subsidiaries, owners. It provides information used by managers internally to make informed business decisions concerning funding sources and capital structure, profitability, return on assets, working capital requirements, asset utilization, employee compensation levels, variable costs per unit of production volume. 

Corporate Finance

This area of finance is mainly concerned with the raising, allocation, and use of funds by a business corporation. The main topics studied include risk management, creating financial reports, creating balance sheets, and accounting statements like income statements. The main goal is to make sure that money is being used in the best way possible for maximum benefit to the organization. There are four key areas where corporate finance decisions are made: project analysis, mix financing, leverage decisions, and dividend policy decisions. Some of the distinguished professionals in this field include David Geithner.

Personal Financial planning

This area of finance mainly focuses on providing information and making decisions that pertain to personal finance questions such as investing in pensions, saving for a house deposit, retirement planning. It also includes taxation schemes and regulations and estate planning schemes and regulations. One key objective of this discipline is saving money to have an adequate fund when one retires.  

Investment

Investment can be related to buying stocks or financial instruments to resell them later for a profit. The discipline comprises buying and selling at the right time to get the maximum return on investment. It also involves maintaining proper records to know where the investments are made so that they are readily available when needed or sold for better profits depending on their nature. 

Money management

This area of finance is mainly concerned with how to monitor and control one’s money, such as daily expenses, monthly expenses, etc. It also includes procedures for balancing the checkbook and the use of credit cards. This discipline enables individuals to make the best decisions concerning their finances, including what to do with any surplus or insufficient funds that they may have.

Banking

The banking system comprises a network of institutions through which people deposit their money for safekeeping and where loans can be taken out by customers wishing to invest in businesses or purchase a property. The banking system is regulated by governments, who set rules about how much interest banks can charge on loans, what kind of insurance they must have and how much cash they must keep in reserve. Banks also provide different accounts, such as checking, savings, and fixed deposit accounts, which earn money for depositors. 

Money management is important since it helps individuals’ control and uses their finances more effectively. This, in turn, enables them to save for a rainy day or plan for the future. Financial planning cannot be limited to an activity undertaken by one individual, and rather, it requires working together with other people.

Dorothy Moore

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