The Finance discipline

FUNDAMENTALS OF FINANCE



INTRODUCTION TO
THE FINANCE DISCIPLINE




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, Finance VS Accounting
What is the difference?

 Finance is the “business activity which concerns with the acquisition and utilization of
funds in meeting the overall objectives of a business enterprise” (B. O. Wheeler)


 Simply, Finance refers to the ways in which funds are generated and used.


 Accounting is the process of recording and summarizing business and financial
transactions and analyzing, verifying, and reporting the results.




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, Finance Activities


 Funding the business - Raising capital (debt and equity) or borrowings

 Optimizing the firm‟s Weighted Average Cost of Capital

 Investing - seeking the best risk-adjusted returns

 Budgeting and forecasting

 Mergers and acquisitions




Accounting Activities


 Bookkeeping (recording transactions)

 Tracking of revenues and expenses

 Internal reporting

 Financial reporting

 Auditing

 Taxation




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