Business finance is a broad term for things concerning the management, development, and evaluation of financial resources and assets. This field encompasses all of the methods, strategies, and institutions used to obtain maximum return from the use of assets and funds and to minimize risk. Business finance is an umbrella term that includes a wide range of activities, including management of corporate finances, investments, borrowing, issuing equity, and marketing. In business finance, financial analysts perform a variety of financial analyses to determine the cost of capital, viability of a venture, the effect of credit risks on a company’s credit rating, and the timing and amount of use of available financing. Other areas of business finance research focus on the interactions between various forms of debt, such as proprietary capital, business loans, merchant cash advances, bank overdrafts, auto loans, and other types of debt.
Although business finance typically covers the areas of loans, investments, mergers and acquisitions, and money management, the scope of the discipline can be quite broad. Within business finance there are also related areas such as business valuation, financial Analysis, Fixed Income Measurement, Private Placement Transactions, Public Placement Transactions, and Alternative Investing. Within business valuation, financial analysts use a wide variety of techniques and databases to determine the value of a business. They combine economic data with a detailed description of the financials of the company to determine how the firm’s assets and liabilities are valued. Financial analysis uses many of the same techniques as accounting in order to provide a transparent assessment of the value of a firm, by assessing both financial markets and characteristics of the company. Finally, Fixed Income Measurement determines the condition of a business’s financial resources and generally refers to the preparation of financial reports and statements that summarize the financial results of a firm.
In addition to the broader topics mentioned above, business finance includes a number of narrower functional areas as well. The functional areas of business finance are: human resources, marketing, sales and marketing, finance, accounting, and law and regulation. Each of these areas has its own strengths and weaknesses, but have a significant role to play in a company’s success. For instance, human resources has a broad range of responsibilities, including managing and recruiting professionals, implementing hiring and firing practices, and developing employee benefits. Marketing is essential for building and maintaining customer loyalty and relationships, while accounting is important for minimizing financial risk and maximizing return on investment.