Field of Finance
Field of Finance
The academic, discipline of financial management may be viewed in terms of various specialized fields. In each held, financial manager is dealing with the management of money and claims against money. Distinctions arise because different organisation pursue different objective and do not face the same basic set of problems. Hampton2 recognized fie areas of finance:
- Public Finance
Central , State and local self governments handle large sums of money, which are received from many sources i.e., tax and non tax revenue. These funds are utilized on developmental and non-development expenditure in accordance with a detailed policies programmes and procedures. Government have the authority to a tax and otherwise raise funds, the must. Dispense funds according to legislative and other limitations. Also, government do not conduct their activities to achieve the same goals as do private organizations. Business try to make profits, Whereas a government attempt to accomplish social or economic objective. As a result of these and other differences, a specialized field of public finance has emerged to deal with governmental financial matters.
- Securities and Investment Analysis
Purchases of shares, debentures, bonds and other securities involve analysis and techniques that are specialized. An investor must study the legal characteristics of each type of security, measure the degree of risk involved with each investment, and forecast probable performance in the market. Usually this analysis occurs without the investor having any direct control over the firm or institution represented by the firm or institution represented by the form of security. The field of investment analysis deals with these matters and attempt to develop and increase the likely 5return from the purchase of selected securities.
- International Finance
When money crosses international boundaries, individuals, business, and government must deal with special kinds of problems. Each country has its own national currency; thus a citizen of the United States must convert dollars of French francs before being able to purchase goods or service in Paris. Most governments have imposed restrictions on the exchange of currencies, and these may effect business transactions. The study of flows between individuals and organizations across national borders and the development of methods of handling the flows more efficiently and properly within the scope of international finance.
- Institutional Finance
A ration’s economic structure contains a number of financial institutions, such as banks, insurance companies, pension fund and credit unions. These companies, pension fund and credit unions. These institutions gather money from individual savers and accumulate sufficient amounts for efficient investment. Without th4ese institutions, funds would not be readily available to finance business transactions, the purchases or private homes and commercial facilities, and the variety of other activities that require substantial amounts of capital, institutional finance deals with issues of capital formation and the organizations that performs the financing function of the economy.
- Financial Management
Individual business face problem dealing the acquisition of finds to carry on their activities and with the determination funds to carry on their activities and with the determination, of their activities and with the determination, of optimum method of employing the funds. In a competitive market place, business must actively manage their funds to achieve their goals. Many tools and techniques have been developed to assist financial managers to recommend proper courses of action. These tools help the manager determine which sources of action. These tools the lowest cost of funds and which activities will provide the greatest return on invested capital. Financial management is the field of greatest concern to the corporate financial officer and will be the major thrust of the approach we shall use in studying finance.
