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Financial Management - Finance – An Introduction

Functions of Finance

   Posted On :  19.06.2018 09:12 am

According to Paul G. Hasings, “finance” is the management of the monetary affairs of a company.

Functions of Finance
According to Paul G. Hasings, “finance” is the management of the monetary affairs of a company. It includes determining what has to be paid for and when, raising the money on the best terms available, and devoting the available funds to the best uses. Kenneth Midgley and Ronald Burns state: “Financing is the process of organising the flow of funds so that a business can carry out its objectives in the most efficient manner and meet its obligations as they fall due.”

Finance squeezes the most out of every available rupee. To get the best out of the available funds is the major task of finance, and the finance manager performs this task most effectively if he is to be successful. In the words of Mr.A.L.Kingshott, “Finance is the common denominator for a vast range of corporate objectives, and the major part of any corporate plan must be expressed in financial terms.”

The description of finance may be applied to money management provided that the following three objectives are properly noted:

Many activities associated with finance such as saving, payment of things, giving or getting credit; do not necessarily require the use of money.

In the first place, the conduct of international trade has been facilitated. The development of the pecuniary unit in the various commercial nations has given rise to an international denominator of values. The pecuniary unit makes possible a fairly accurate directing of capital to those parts of the world where it will be most productive. Within any given country, the flow of capital from one region to another is guided in a similar manner.
The term ‘finance’ refers to the financial system in a rudimentary or traditional economy, that is, an economy in which the per capita output is low and declining over a period of time. The financial organisation in rudimentary finance is characterized by the absence of any financial instruments of the saving deficit units of their own which they can issue and attract savings. There will not be any inducement for higher savings by offering different kinds of financial assets to suit the varied interests and preferences of the investing public. The other characteristic of such a financial system is that there are no markets where firms can compete for private savings. 
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