Discuss nature and significance of Business Finance.

Solution

In general, finance may be defined as the provision of money at the time it is wanted. However, as a management function it has a special meaning, finance function may be defined as the procurement of funds and its effective utilization. Some of the authoritative definitions are as follows :
“Business finance is that business activity which is concerned with the acquisition and conservation of capital funds in meeting the financial needs and overall objective of the business enterprise.”
“Business finance is the business activity which is concerned with planning, raising, controlling and administration of funds used in the business.”
The various activities for which finance is required may be related to one or more of the following purposes :

1. Purchase of fixed assets, such as land, building, plant, machinery, furniture, fixture, etc.

2. Meeting the cost of current assets e.g. inventories, account receivable, etc.

3. Meeting the cost of formation of a company e.g., drafting of legal documents, registration fees, stamp duty etc.

4. Meeting the cost of raising finance e.g., underwriting commission, brokerage etc.

5. Purchase of intangible assets like goodwill, patents, copyright, etc. becomes easy.

6. Providing for the growth and expansion the business.

Some More Questions From Sources of Business Finance Chapter

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Sources Of Business Finance

Discuss nature and significance of Business Finance.

Some More Questions From Sources of Business Finance Chapter

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