Finance is the life blood for a business and is a absolute necessity to operations long term as well as short term. Every business has a different aim about its finance needs. Also, every business requires finance to expand, diversify or simply for daily operations.
The sole aim of business finance is to develop the business through its efficient usage.
The main objectives of business finance are:
1. To generate Cash Flow: The main objective of business finance is to generate cash flow. Better cash flow results in profit maximization. Businesses should use the finance in such a way where the cycle is shorter and the return is more.
2. To Increase Wealth: Using the business finance at its best is the skill of an avid entrepreneur. The net value of the operation or transaction done should be positive. This results in a stable increase in the assets of the business. Also it is beneficial for the business to maintain a steady growth in the operations.
3. To Develop Value in the Business: Proper usage of the business finance will create a sustainable business. Over and above that, it generates a value for the business by enhancing the business cycle. It also maximizes the wealth of the shareholders of the company, thus increasing value of the business.
4. Return on Investment: Business finance should allow business a constant and increasing return. The rotation of the finance in the business guides the rate. It also helps in the proper disposition of assets.
Business Finance, in a wider sense, can be divided into Fixed capital and Working capital segments.
Fixed capital includes purchasing assets like land, building, machinery. The funds invested in the fixed assets remain there for a long time.
Working capital means the funds required for day to day carrying out of operations of a business. It results in speedy turnover of finance.