The department of business which looks into the management of capital is referred to as finance. The careful control of a person’s spread of risk portfolio with the expectations of earning better returns in the form of income is, therefore, part of the discipline. Analysis of the various risks that may pose some interference with a person’s income is therefore involved in finance. Capital in finance is always weighed with a comparison to the rate of investment returns, the value of assets and the possible risks that they face. The field of finance is too big, and therefore, it has been dividing into three different groupings.
Personal finance refers to all activities that in one way or the other, affect the financial status of an individual. Having considered this, the financial position of a person is looked into with regards to the environmental factors that can influence his financial position to determine how they will bring about the changes. In consideration is the net cash flow that occurs as a result of movement of money into and out of a person’s hands and his ideal status in regards to his financial capabilities. Having been enlightened about his financial position, the individual therefore takes efforts of making sure that his financial position remains stable or improves. The the entire process involved in the acts of trying to identify the probable future unforeseen certainties and embarking on establishing measures to combat them, working on how to manage the various taxes, coming up with the objectives of investments and the arrangement of retirement plans helps in the accomplishment of the planning.
Corporate finance focuses on how organizations get their finances and the necessary procedures that those in charge of the organization undertake to ensure that shareholders interest of value addition is attained. The overall mandate of corporate finance is to look into how it is the organizations will be able to lower the rate of risks that faces the company and while in the process of doing so, be able to maximize opportunities that will create revenue for the organization and its owners at large.
Budgeting is henceforth considered in this regard to determine the different departments which will be allocated with money. The ability to acquire money is important in establishing the financial powers of a firm.
Public finance pertains to all forms of financial activities that are undertaken by governing bodies such country, province, municipality and the county governments. In this regard, the governing authority evaluates the various investment projects that should be undertaken in the region in order to serve the people. The governing body is tasked with looking at how capital for the project will be acquired and how it will be paid back.