Reviewed by Aug 27, 2020| Updated on
Finance is a term which broadly describes the study and system of investments, money, and other monetary or financial instruments. Most authorities classify finance into three discrete classes, and they are personal finance, corporate finance, and public finance.
Other categories of finance include the latest and emerging area of behavioural finance and social finance. These sought to recognise the cognitive causes that drive the financial decisions, for example, social, emotional, and psychological.
More About Corporate Finance
Business organisations get their financing done in several ways. It ranges from credit facilities to equity-linked investments. An organisation might have to obtain a loan from a scheduled commercial bank or make an arrangement for a line of credit. Obtaining debt and handling it with utmost care will help in the company expanding and becoming more profitable in the long run.
Startups and small companies will receive capital investments from venture capitalists and angel investors. This will be done in exchange for a certain percentage of ownership over the company.
If the company is able to build on the capital and thrive, then it will go public by listing its shares on the recognised stock exchanges. This can be done through Initial Public Offering (IPO), which may result in a great inflow of investments.
Well established or blue-chip companies may opt to give out additional shares and issue bonds (corporate) in order to raise funds. Organisations might go on to purchase dividend-paying stocks, invest in blue-chip bonds, and interest-paying bank deposit certificates. Furthermore, other companies may also be bought in a bid to pump up their revenues.
Finance is a term which broadly describes the system and study of investments, funds, cash, and money in other forms, such as financial instruments.