Thursday, October 8, 2009


Finance could have many different meanings to different persons. The literal meaning of finance equates it with money-cash. This is a lay man's understanding of finance. Three distinct meanings could however be associated to finance. Namely:
- Finance as an academic discipline,
- As an economic force; and
- As an enterprise or business function.
Finance as an academic discipline means the study of the nature of finance, the uses of finance, the management of all means of settlement available to different types of modern organizations. These organizations may be households or individuals hence personal finance, government and its agencies in which case we are talking of public finance; international or inter-sovereign entities hence international finance, and corporate or business organization hence corporate finance.
The economic force perspective of finance, refer to the ability to effect settlement for something of value obtained through voluntary exchange process. The settlement may take either of two options-final settlements or deferred settle. Final settlement infers down payment that is, cash and carry basis as when one pays money to receive a textbook or some other items of value. Deferred settlement connotes credit settlement. The settlement is agreed to be consummated or effected at a future date. This is credit sales or purchase, or transaction on promises to pay at a future date.
The term finance as an enterprise function refers to the discharging of function or tasks associated with all the means of settlement available to a business organization.

No comments:

Post a Comment