Every new business needs finance when they are firstly starting up. Since whether you're a manager or owner, your core expertise, or your country of origin, you will need but not limited to buy equipment, set up your workplace and sort out all of your marketing costs. When you begin to make money, you will need to cover all of your business bills and your staffs' wages. Thus, knowledge of finance is unavoidable and absolutely critical to whatever success you hope to achieve during your business career.
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Now, let me introduce you about the business finance from the following aspects:
I. Function of business finance management: 1. orientation function: since finance management is an activity that organizes enterprise finance and coordinate the financial relations in all aspects; 2. activation function: in traditional capitalistic view, profit maximization is anyone’s goal. Thus all staffs are caring about issues related to finance; accordingly, finance can be a good exciter.
II. Basic characteristics of business finance. Business finance determines enterprise survival and development thus have the following characteristics: 1. hierarchy; 2. polyphyletic; 3. relative stability; 4. maneuverability.
III. Goals categories of business finance:
1. Profit maximization: it means that enterprise's profit increases continuously through business finance and operation management. Profit stands for an enterprise newly-created fortune, thus more profit indicates more increased fortune and closer to enterprise goal.
2. Shareholders' fortune maximization: enterprise is mainly consisted of shareholders, whose aim is to increase their own fortune. This is more active than profit maximization, since it can be quantized through stock share and considers the time value and risks. However, there are some defects: it is clear for listed company other that unlisted and it neglects the asymmetric information.
3. Social value maximization: since business entity is multilevel, thus business finance is also related to all-aspect interest relations. Therefore, the realization of enterprise financial goal shall be governed by larger social systems other than the enterprise itself. Only in this way, can an enterprise coordinate with surrounded environment and assume a certain social liabilities, thus to develop simultaneously with the society.
That's all about the business finance, thank you!
