Finance encompasses the management of money at the personal, corporate and public levels.

Students learn the big picture of business and can prepare for careers ranging from financial

adviser to investment banker.

Here are five reasons why should I study finance:

1. Finance Is Ubiquitous

It doesn’t matter if you work in tech or education, consulting or advertising. Your company
needs cash flow to do things like pay everyone’s salary, distribute dividends, and reinvest in
product innovation.
Even if you don’t manage a budget yourself, finance is at the core of business decision-making.
If you’re pitching a project or angling for additional funding, understanding and being able to
communicate how you can turn that investment into revenue for your organization will help you
make a more convincing argument.

2. Finance Will Help Your Resume Stand Out

If you're looking for ways to differentiate your resume, finance is a good place to start.
Especially if you’re entering the workforce as a young professional without extensive
experience, showing you have business knowledge before you’re even in the field can make you
a more attractive candidate. This is particularly relevant in non-finance fields, where financial
education is less common but no less fundamental to running a successful business.

3. The Finance Industry Is Constantly Evolving

The world of finance has grown beyond traditional big banks. SoFi, Stripe, and Coinbase may
not have existed a decade ago, but they have since revolutionized student loan financing,
payment technology, and cryptocurrency, respectively. Understanding finance can help you keep
up with the growing field of financial technology, also known as “fintech,” whether you want to
work in the industry or become a conscious consumer of its products.
4. You’ll Become a Stronger Problem Solver

Yes, finance involves formulas, Excel spreadsheets, and ratios. But it also involves analyzing
these numbers and turning them into actionable business insights. For example, consider the
concept of value and its role in business decisions. Learning finance will teach you how to
understand the difference between price and value, how to create value, and how the future
affects value today.
Learning how to take quantitative data and use it to solve problems and make sound business
decisions is a valuable skill that can serve you in your career now and in the future.

5. Finance Is Important Outside the Office, Too

While understanding finance is critical for work, it’s also critical for your fiscal well-being
outside the office.
We're faced with financial decisions, small and large, every day. Whether it’s choosing to eat in
or order out dinner, paying your gym fees in a lump sum or monthly installments, or turning your
hobby into a side hustle, these choices require a basic knowledge of finance.

Types of descision that a financial manager make:

If carefully reviewed what constitutes a business, we will come to the conclusion that
there are two things that matter, money and decision Without money, a company won’t
survive and without decisions, money can’t survive. An administration has to take
countless decisions in the lifetime of the company. Thus, the most important ones are
related to money. The decisions related to money are called ‘Financing Decisions.’

There are three decisions that financial managers have to take:

1. Investment Decision
2. Financing Decision and
3. Dividend Decision

Investment Decision

These are also known as Capital Budgeting Decisions. A company’s assets and
resources are rare and must be put to their utmost utilization. A firm should pick where
to invest in order to gain the highest conceivable returns.This decision relates to the
careful selection of assets in which funds will be invested by the firms. The firm puts its
funds in procuring fixed assets and current assets. When choice with respect to a fixed
asset is taken it is known as capital budgeting decision.
Factors Affecting Investment Decision

Cash flow of the venture: When an organization starts a venture it invests a huge capital
at the start. Even so, the organization expects at least some form of income to meet
everyday day-to-day expenses. Therefore, there must be some regular cash flow within
the venture to help it sustain.
Profits: The basic criteria for starting any venture is to generate income but moreover
profits. The most critical criteria in choosing the venture are the rate of return it will bring
for the organization in the nature of profit for, e.g., if venture A is getting 10% return and
venture В is getting 15% return then one must prefer project B.
Investment Criteria: Different Capital Budgeting procedures are accessible to a
business that can be utilized to assess different investment propositions. Above all,
these are based on calculations with regards to the amount of investment, interest
rates, cash flows and rate of returns associated with propositions. These procedures
are applied to the investment proposals to choose the best proposal.

Financing Decision
Financial decision is important to make wise decisions about when, where and how
should a business acquire fund. Because a firm tends to profit most when the market
estimation of an organization’s share expands and this is not only a sign of development
for the firm but also it boosts investor’s wealth. Consequently, this relates to the
composition of various securities in the capital structure of the company.

Factors affecting Financing Decisions

Cost: Financing decisions are all about allocation of funds and cost-cutting. The cost of
raising funds from various sources differ a lot. The most cost-efficient source should be
selected.
Risk: The dangers of starting a venture with the funds from various sources differ.
Larger risk is linked with the funds which are borrowed, than the equity funds. This risk
assessment is one of the main aspects of financing decisions.
Cash flow position: Cash flow is the regular day-to-day earnings of the company. Good
or bad cash flow position gives confidence or discourages the investors to invest funds
in the company.

Dividend Decision
Dividends decisions relate to the distribution of profits earned by the organization. The
major alternatives are whether to retain the earnings profit or to distribute to the
shareholders.

Factors Affecting Dividend Decisions

Earnings: Returns to investors are paid out of the present and past income.
Consequently, earning is a noteworthy determinant of the dividend.
Dependability in Earnings: An organization having higher and stable earnings can
announce higher dividend than an organization with lower income.
Balancing Dividends: For the most part, organizations attempt to balance out dividends
per share. A consistent dividend is given every year. A change is made, if the
organization’s income potential has gone up and not only the income of the present
year.

Goals of Financial Manager:

The long-term objective of financial management is ultimately to help the company

maximize profits. In order to do that, a financial manager needs to focus on smaller,
more specific goals of financial management: planning, cost containment, cash flow
management and legal compliance.

Planning

A financial manager differs from an accountant in that he will focus on planning a long-
term financial strategy, assigning the actual bookkeeping work to his underlings. These
plans can include setting targets for limiting overhead costs, production expenses and
debt-serve management as well as achieving specific revenues, profit margins and
gross profits. He will also need to make plans for the right investment options if a
company ends up having any excess profits. Additionally, he may discover ways for the
company to acquire the capital necessary for expansions or acquisitions.

In order to make these plans, he will need to create a master budget known as a budget
variance analysis that takes into account the company's balance sheet, accounts
receivable and payable reports, cash flow records and profit and loss statements. The
financial manager will regularly review this budget variance analysis to decide if the
actual performance of the company is meeting its projections, and if not, he will help
determine what changes should be made.

Cost Containment

Cost containment goes beyond simply setting spending levels and creating cost-cutting
measures. A financial manager must also create requests for proposals, bidding
processes and purchasing policies for contractors, vendors and suppliers. This is the
only way to ensure that the company gets the best combination of quality and price.

A financial manager will also look at the company's current and future resource needs to
determine if it is better to perform activities in house or to outsource the work. The
financial manager also needs to manage the company's debt and taxes to minimize
interest payments and tax liability.

Cash Flow Management

Cash flow is the actual receipt of money and payment of bills as opposed to the
company's budgeted income and expenses. Managing the company's cash flow is one
of the most important duties of a financial manager. While a company might be owed a
certain amount by customers, it is irresponsible to assume it will get that money in time
to pay off bills before they become due. The goal of a company's cash management
policy is to make sure there is always enough money to pay the bills by keeping enough
credit and cash reserves in order to keep the company financially stable.

Legal Compliance

A financial manager must make sure the business meets all legal obligations related to
finances, including payment of sales and income tax, employee benefits, state and
federal wage requirements and reporting to the Securities and Exchange Commission if
the company is a public corporation. The financial manager must also ensure the
company meets industry-specific laws. To handle these legal obligations, a financial
manager might work with an internal team or consultants including tax experts and
CPAs.