How Finance Plays a Vital Role for An Organization

Posted by Christian T. Holm on March 13th, 2019

Finance is a wide term and cannot be summed up in few words. Its sense changes according to the usage. But simplest definition of finance can be arrangement of funds to run a business. The study of investment in a business is also called finance. The main objective of finance in any company is to make the products or services sale able to earn profits and to cover risks. It is also called the science of money management. The financial management includes the gathering, inspecting and connecting the financial information for the top management to make decisions for setting future goals and objectives. Students can avail top-class assignment writing help on finance without any plagiarism. 

Following are the purpose of finance for which it is needed in an organization:

1. Finance is mainly required for the development of new products and services. For example a new model of a mobile phone with new features popular in the market. After development the product or service requires powerful marketing for its launch against the competitor products.

2. It is also required by a company to fix the price and quantity of a new or existing product. For example any company revising the prices of its products according to the market trend.

3. Finance is also concerned with borrowing money from large financial institutions in order to expand the business. For example a departmental store which wants to expand itself to other cities needs finance for this purpose.

4. It is also concerned with the adjustment of production operations of a business such as in situations like market slump, unfavorable season, introduction of a new product etc. For example a fruit juice manufacturing company reduces its production process during winters as the sales are reduced during this season.

 Who are the Users of Financial Information?

Following are the people who require the financial information:

1. Consumers: Financial information of a company makes it saleable. If it is strong in the market, its products will make profit in sales. It also makes the customer rethink whether to buy the product in future or not.

2. Competitors: The financial position of an organization determines the position of competitors. If a company is having a strong hold on the market it is quite obvious that the competitors will be eliminated slowly.

3. Government: As it has to levy taxes and duties, financial information is very important for the government also.

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