Finance: The Importance Of Finance In A Business

Chapter-I Introduction to Finance Provision of money would be called as finance in other words it might mean to use the cash or money in a productive manner. Finance is a word that is used in our day to day life, the basics of finance could be easily understood and implemented in our daily life. The day to day transactions of comparing prices, writing cheques to pay for purchases or sales, using credit cards for payments and purchase of goods and services and maintaining a bank account are all considered as financial activities. Finance becomes the most important part of any organization, no matter how small or big the organization

It needs finance for starting a business and for its expansion, modernisation and diversification. Finance is also needed for meeting the day to day transactions. So depending upon nature of activities to be financed, the financial requirements or needs of a business enterprise may be classified.

Importance of Finance: 1. It is the master key which provides access to all other resources that are employed in the production and marketing of goods and services.

2. It is the lubricant which keeps a business enterprise moving and dynamic.

3. It integrates the various segments of a business enterprise, for the smooth running of the business in the direction of attaining the organizational goals.

4. Finance is needed by a business undertaking right from the beginning and at every stage during its existence.

5. All managerial functions like planning, organizing, directing, co-ordination and control can be discharged effectively only if a concern possesses adequate finance.

6. The availability of sufficient finance with a concern will help the concern to offer fair return on investment to shareholders.

7. Finance is important in terms of payment of taxes to the government in