Business finance is often thought of as the financing of business ventures. While business loans are one aspect of business finance, it really encompasses a number of different techniques and strategies. Some examples of various business finance techniques include: lending, working capital financing, merchant financing, venture capital, indirect investors, first mortgage, etc. Business finance is also a general term that includes matters about the study, development, management, and distribution of funds and assets. There are many business finance terms that are commonly used to describe these various concepts.
A good method to learn about business finance is to learn about financial statements, which are basically records of how the firm conducts business on a day-to-day basis, reporting historical information on cash and other financial assets and liabilities. Financial statements are essential to the understanding of financing options and to the preparation of forecasts and projections. A large amount of information must be included in a company’s financial statements so that managers can make informed decisions about their company’s future. An accountant or finance professional can help a manager design and maintain an effective business finance system that meets all of the organization’s needs.
The financial statements that accompany a business firm’s annual report are the best way to determine the effectiveness of business finance. A good company’s financial statements will show both its assets and liabilities, as well as its short and long-term liabilities. All of this information helps a manager determine the health of the business finance function. The purpose of a company’s annual report is to provide management with the information it needs to determine if current operations are supporting the planned objectives and if strategies for future growth are appropriate and feasible.