Importance of Finance

>> August 25, 2009


Finance is very important for business organisation . Finance includes planning of financial resources , making of optimum capital structure and effective utilization of financial resources by deep analysis of cost of capital and capital budgeting tool .

It is very advance technology . Like other technology , it can also increase the efficiency of business , so effective utilization with reasonable care is very necessary in Finance . Without this Finance can become dangerous for company . Suppose , if company obtains large amount through his network resource but company has not made good financial planning regarding its effective utilization , then Company can reach at the stage of Bankruptcy , because If Company has not good plan for investment , it will unable to provide good return to its creditor and shareholder , after this Creditors of Company can aback Company after demanding their fund . So , study of finance and its tool is very important .


Finance also play a vital role for progress of Corporate . All Indian big corporate like Reliance , SBI , Indian Oil Corporation , Bharat Heavy Electricals and Infosys can only grow because , they understood the importance of Finance and effective utilize its tool both in capital and cash market .
Professor Shiller of Yale University of USA explain the importance of Finance .

His way of instruction is very simple and easily understand by listening his lecture concentrately. His 1 hour and 14 minutes lecture is also broad caste on YouTube .




Finance touch the nervous system of business body . Because , Share market's fluctuation , Govt. policies and strategy , Economic changes and other changes in business environment can only analysed with the help of Finance . Finance and accounting is also so closed linked , So, Financial decision are also effected from accounting results also .

I have more than 8 years experience in the field of Finance and I can only say one thing that study of finance is needed to every general person because , every person also want to earn money from passive source and this way reaches him to stock market where he purchases securities of company . Good knowledge of Finance can also helpful for general person who want to invest in company .

It is also useful for Govt. So, not only Indian but all countries make finance budget for whole financial year. Finance budget is also tool of finance which tells estimated expenses and incomes of Govt. After making good finance budget , Govt. plans can be succeeded and Govt. can serve more poor people of country .
If we think about the development of any country , then finance also plays his role for its development . From an underdeveloped economy to developed economy , Finance is very important for developing the underdeveloped economy . If any country is already developed , then finance can help to stable the economy in that level . Because , a simple mistake in Finance and misuse its tool can create financial crisis and developed country can not also fight with this .

Deep knowledge of finance can enable anybody to open to new way for generating new fund and earning . But it is also dangerous when some body uses finance's tool for generating black money and depositing in Swiss bank . In above lecture , Professor Shiller also told that it is dangerous like nuclear power technology.



So , In end of this article , I only say that Finance is not just blood of business body but it is also soul of business body . Even blood is transferred in human body and saved any human being's life . But without adopting proper system of finance of business , business body may dead with in some movement so , be careful and remember always its importance .

Related : The role of Finance Director in Company





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