Business finance is a wide term for things about the study, development, management, and allocation of financial resources. It encompasses all the decisions made by a company or government with respect to how the funds within it will be used, transferred, and eventually returned. The world of business finance deals with the allocation of resources in terms of resources intended for growth, budgeting of resources for specific purposes, allocation of funds between internal and external users, allocation of resources to achieve short-term goals, and planning methods to reach long-term goals. As this article is about the world of business finance, it should be noted that there are also elements that are involved in the management of financial resources for the public sector.
The aspects of business finance that fall under the realm of public administration are concerned with things like budgeting and financial planning. The budget, in the broadest sense, is allocating the capital assets of the company so that it can meet its ongoing expenses and its short-term financial goals. Financial planning, on the other hand, involves the process of forecasting the supply of necessary resources in the market in the future as well as analyzing the demand in the market and the effect of supply on demand. Both processes are used to determine the level of profitability for the company. If the company’s profit margin is too low, it may be due to improper management of its finances or poor financial planning.
The analysis of financial plans and forecasts is often performed by the financial analysts or the business finance managers. They use the techniques of qualitative analysis, which involves conducting descriptive and explanatory analysis of the available facts. In fact, the entire purpose of business finance is to achieve a balance of qualitative analysis and quantitative analysis when formulating plans or budgets for the company.