This article tells you about Relation Between Business And Finance. Business and finance are related terms. Both depend on each other. They are the features of that objective which we normally call profit. Profit is the basic outcome of any business venture. Finance acts as the support system of any such venture. There are some functional aspects of business that needs to be looked into to understand the term better.
Purchase and sale of goods are the basic theme of any business. It is of utmost importance for a business to have continuity or recurrence in purchase and sale. So recurring purchase and sale of goods to earn profit is one of the most common aspects of business. Business is an economic activity based institution. This is where the role of finance comes in.
Economic activities are concerned with the creation of utility, by removing the hindrances of place, time, form, etc. As such, performance of economic activities is one of the characteristics of business. Finance plays a part here by checking cost related issues of a business organization.
A business group will incur more profit if it has limited liabilities to its name. This is a mark that shows that a business group is genuine. Such checks on finance and costs are done by the government of the country in which the business group is based. It is also done by certain private and commercially affiliated professionals.
The government keeps a check on liabilities to make sure that the economy of the country is on the positive side of the graph. This makes sure that the business companies working within the economy are all genuine ones and it aims at general welfare. Commercial groups and private professionals do provide such help too. This is only with a motive to obtain a part of the profit. All in all, it’s a monetary transaction.
Business has some structural aspects as well. Active role of an entrepreneur is indispensable for the promotion of a business. Of late, such efforts are found both in private and government sectors. After determining the overall activities of a business, and dividing them in accordance into various levels, is of utmost importance. Organization relates to the integration and coordination of different activities. Irrespective of the size of business, capital is important in conduction of its activities. The existence and the volume of a business depend on the amount of capital.
On the basis of the nature of investment, capital is divided into two groups. They are fixed capital and working capital. The former relates to investment in fixed assets, while the latter is concerned with day to day expenses. Risk and uncertainty is another aspect in business forms. When you venture out with a business, there is always a probability of incurring losses. Hence the factor of risk and uncertainty come into the picture.
A country’s economy depends on business and organization. Thus the terms business, profit, finance and investment have become a part of our day to day lives. Be it a profession or not, business is an important venture related to the basic welfare of a particular place.