Business Financing Studies How Money Is Spent And Budgeted
Business financing is the study of funds management of a business, primarily dealing with the concepts of time, money, risk, and how these three are interrelated. It is essentially the methods of how money is spent and budgeted.
Overview Of The Business Financing Industry
Presentation of the overview of business financing is in order. An entity that earns more than it spends can lend or invest the surplus income. On the other hand, if an entity earns less than it spends, it can raise capital by borrowing or selling equity claims, decreasing its expenses, or increasing its income. The lender (the entity having excess income) can find a borrower (the entity lacking income) usually through some financial intermediary such as a bank, or buy notes and bonds in the bond market. The lender receives interest while the borrower pays a higher interest than the lender receives, and the financial intermediary (usually the bank) earns the difference for arranging the loan.
The Areas of Business Financing
The three general areas of financing in business are personal finance, business or corporate finance, and public finance. Business and personal finances are also considered private financing. Personal Financial decisions may be for payment for education, installment payments for durable goods like real estate properties and cars, buying insurance premiums (like health and property insurance), investments and retirement benefits. It may also include bequests and inheritances or paying off loans and debt obligations.
Corporate finances would involve planning projects that would increase revenues, generate expansions, meet payables, or raise additional funds. Initial public offering options are considered as well as exit strategies. Equities, stocks, and bonds are the major elements dealt with here.
Public finances relates to the budgeting and spending of sovereign states and sub-national entities like states, provinces, cities, counties, municipalities, etc. and their related public entities like school districts and all other government agencies. It also includes debt issuance for public works projects.