Finance is defined as the management of money and includes activities such as investing, borrowing, lending, budgeting, saving, and forecasting. There are three main types of finance: (1) personal, (2) corporate, and (3) public/government. This guide will unpack the question: what is finance?
Video Explanation of Finance
Watch this short video to quickly understand the main concepts covered in this guide. It’ll explain the definition of finance, provide examples of finance, and cover some of the common topics on finance.
Examples
The easiest way to define finance is by providing examples of the activities it includes. There are many different career paths and jobs that perform a wide range of finance activities. Below is a list of the most common examples:
- Investing personal money in stocks, bonds, or guaranteed investment certificates (GICs)
- Borrowing money from institutional investors by issuing bonds on behalf of a public company
- Lending money to people by providing them a mortgage to buy a house with
- Using Excel spreadsheets to build a budget and financial model for a corporation
- Saving personal money in a high-interest savings account
- Developing a forecast for government spending and revenue collection
Finance Topics
There is a wide range of topics that people in the financial industry are concerned with. Below is a list of some of the most common topics you should expect to encounter in the industry.
Finance Careers
A definition of finance would not be complete without exploring the career options associated with the industry. Below are some of the most popular career paths:
Additional Finance Resources
To continue developing and preparing for a career in the field, these additional CFI materials will be helpful:
More Questions and Answers
CFI’s mission is to help anyone become a world-class financial analyst and has a wide range of resources to help you along the way. In order to become a great financial analyst, below are some additional questions and answersfor you to explore further:
FAQs
Finance – money used to fund a business or high value purchase. Financial year – a 12-month period typically from 1 July to 30 June. Financial statement – a summary of a business's financial position for a given period. Financial statements can include a profit and loss, balance sheet and cash flow statement.
What is the best definition of financing? ›
What Is Financing? Financing is the process of providing funds for business activities, making purchases, or investing. Financial institutions, such as banks, are in the business of providing capital to businesses, consumers, and investors to help them achieve their goals.
What best describes finance? ›
Finance is concerned with the art and science of managing money. The finance discipline considers how business firms raise, spend, and invest money and how individuals divide their limited financial resources to achieve personal and family goals.
What is finance in short description? ›
What Is Finance? Finance is a term for matters regarding the management, creation, and study of money and investments. It involves the use of credit and debt, securities, and investment to finance current projects using future income flows.
How can finance be best defined? ›
Finance, of financing, is the process of raising funds or capital for any kind of expenditure. It is the process of channeling various funds in the form of credit, loans, or invested capital to those economic entities that most need them or can put them to the most productive use.
What does actually mean in finance? ›
On the other hand, actuals are the reality of what a company has actually been able to achieve within a given time frame once a business has run its accounts. In short, a budget represents what it is thought a company can do, while actuals represent what has actually been done.
How do you explain finance? ›
What is Finance? Finance is defined as the management of money and includes activities such as investing, borrowing, lending, budgeting, saving, and forecasting.
How do you describe financial? ›
pertaining to monetary receipts and expenditures; pertaining or relating to money matters; pecuniary: financial operations. of or relating to those commonly engaged in dealing with money and credit.
What is the difference between money and finance? ›
Money is a part of finance. Finance is a broader concept that includes the management, creation, and study of money. The money includes cash and cash equivalents that are readily available for use. Finance includes personal, public, and corporate finance.
What is finance best defined as? ›
Finance is the study and discipline of money, currency and capital assets. It is related to but distinct from economics, which is the study of the production, distribution, and consumption of goods and services.
The word finance also emerged in the 15th century but from Anglo-French finer, meaning "to end" as well as "to pay," and similarly in English referred to an end or payment. In the 18th century, the word came to refer to pecuniary resources and the management of funds.
What is term finance? ›
Term loans are immediate, up front financing sources for local and small businesses that extend over a long time. These loans are long-term debts raised by companies that come with a schedule for payments and interests paid in installments at fixed or floating rates.
What is the meaning of means of financing? ›
Means of financing means borrowing, use of cash balances, and certain other transactions that are used to finance a deficit or a surplus. By definition, the means of financing are not treated as receipts or outlays.
What is the best way to describe finance? ›
What is Finance? Finance is defined as the management of money and includes activities such as investing, borrowing, lending, budgeting, saving, and forecasting.
What is the meaning of term financing? ›
Term Financing means any indebtedness or facility for or in respect of money borrowed or raised and which is either perpetual or having an original maturity of not less than 365 days of (i) the Issuer (and which shall, for the avoidance of doubt, include without limitation the Existing Senior Secured Notes, the ...
