Finance is a broad concept that describes two closely related activities: the study of how money is managed and the actual process of acquiring the necessary funds. It covers the supervision, creation and study of money, banking, credit, investments, assets and liabilities that make up the financial systems. Many of the basic concepts in finance come from micro and macroeconomic theories. One of the most fundamental theories is the time value of money, which is actually worth more than a dollar in the future.
What are finances
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Finance, is understood as the set of activities and administrative decisions that lead a company to the acquisition and financing of its fixed assets (land, buildings, furniture, etc.) and current assets (cash, accounts and accounts receivable, etc.)). The analysis of these decisions is based on the flows of income and expenses, as well as effects on the administrative objectives that the company intends to achieve.
On the other hand, this word is adopted from French. The word finance has existed since the 13th century and is formed with the verb finer (derived from finir, to finish, which at that time meant “to pay” or to end an agreement).
The origin of finance
The historical evolution of the origin of financial relationships in terms of business development is presented. The main function of companies is the production of those that satisfy various human needs.
The existence of companies is conditioned by the ways in which humanity satisfies its needs, the way in which society organizes itself to solve the problem of scarcity, the economic thinking of the historical period and technological advances, among other components.
The study of the origin of financial relationships can be divided into the following stages:
- Greeks (6th century BC)
- Romans (500 BC-500 AD)
- Middle Ages (V-XV century)
- Renaissance (late 14th-16th century)
- Mercantilism (XVI-XVII)
- Formation of nation states (1100-1500 AD)
- Industrial Revolution (18th century), 19th century and 20th century.
Then, the Middle Ages in the V-XV century were represented by the thinkers: Saint Thomas Aquinas (1225-1274), Saint Augustine-Balducci Pegoletti (1335-1343), Weber (1511) and Lucas de Paciolo Summa (1494). This era was characterized by the fact that the production system was the "fiefdom" that provided the satisfiers that the population needed. Later guilds emerged that established defined systems to manage commercial businesses.
With the use of mechanical force, a change in industrial processes begins and examples of large-scale enterprises emerge. The activity of the trade begins to be accepted, but it did not develop because there were several restrictions. Nation states seem to focus on achieving wealth and power. The first large-scale companies emerged in the 13th century, and the first attempt to measure the financial performance of companies began, it was at this time that Paciolo's theory appeared.
In the Renaissance (XIV-XVI) and Mercantilism (XVIII), the Nation-State was consolidated, the colonization of America began and joint-stock companies arose. These events helped the formation and consolidation of companies. The state appropriated the family notes that taught how to run businesses successfully.
And in the Industrial Revolution (18th and 19th centuries), banking and monetary systems were established, large-scale commercial enterprises were organized, and the first factories emerged. The first company mergers were presented and the need for financial tools to measure financial performance arose, which is why the first universities that study business were founded.
Today there is greater accessibility to learning tools in this regard. If an individual wishes, they can study careers related to business and finance, consult finance books or simply educate themselves through the internet.
Elements of Finance
Financial statements comprise a large amount of data in a simplified, organized, and synthesized way, designed to provide useful information for owners, potential buyers, and creditors of a business.
Background
An investment fund is a company that invests the resources it obtains from different users, in an investment portfolio with defined characteristics. In other words, when you invest in a fund, what you are doing is buying the fund's securities. Those titles have a value that varies over time.
Banking
Within this system, banks are the best known intermediaries, since they offer their services to the public and are the strongest and most used part of the payment system. The most common product offered by banks, and the most widely consumed in the financial system, are loans.
Credit
Credit is a financial operation that consists of the loan of a limited amount of money and during a determined period of time; In this scheme, users borrow money from banks and pay a premium for having it. This premium is the interest rate.
Investments
It refers to the disposition of capital in a project, initiative or operation in order to replace it with interest, when generating profits.
Finance classification
Since people, businesses and government entities operate in the field of finance, it is often divided into three categories:
Personal finance
It refers to the financial planning of an individual's economic position. Furthermore, it is a very individual activity that is highly dependent on one's earnings, life requirements, goals, and wishes.
Corporate finance
They consist of financial activities related to the management of a corporation, generally with a division or department established to oversee financial activities.
Public finances
These include tax, spending, budget, and emission policies that affect how a government pays for the services it provides to the public.
Finance career
The finance bachelor's degree develops a rigorous scientific, technical, and ethical view of equity and corporate science.
The finance objectives in this career are to generate managerial profiles with executive performance capabilities that are trained to make key decisions for the financial and stock market well-being of any organization.
Financial theory is worked on with data, statistics, figures, and stock balances almost every day. Obviously, this depends on the finance department in which it will be developed. For this reason, one of the characteristics that you must have to achieve a degree in Finance is analytical thinking, capable of delving into the information you have, synthesizing data and interpreting it to make reports, make decisions and create strategic proposals.
On the other hand, as for the subjects to be studied, some will be related to the stock market and corporate. During the first semesters, students will receive financial theories related to day-to-day business on the management of companies.
In addition, it will include subjects related to the management and interpretation of information and the control of financial data, accompanied by the basic principles of macroeconomics and microeconomics, for support on the internet there are countless finance books in PDF and free.
Another important aspect is oral and written expression, for financiers, arguing is key. They are in charge of the evaluation of investment projects, types of risks in the world of Finance and how to face them, business evaluation and marketing and promotion strategies for goods and services and market research.
However, along the same lines of ideas, an example regarding CDMX Finance is the initiative announced as one of the 19 most opportune for innovative projects in Latin America and the Caribbean. This was presented by the Mexican Institute for Competitiveness, hand in hand with the Ezuza digital transaction application.
The main objective of the project is to promote financial inclusion through an electronic platform for mobile payments in social programs, which makes it easier for people with many needs in Mexico to have their financial support more directly and easily.
It is important to note that the Ministry of Finance has a Facebook account to keep the public informed about CDMX finances, and financial news can also be obtained through the online newspaper El Financiero.
