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Finance

Finance, derived from the Latin word for 'end', involves the management of capital flows among individuals, companies, and states, focusing on money and capital markets, investments, and financial management. Its evolution spans from the traditional approaches of the 14th century to modern strategies emphasizing market value and decision-making in companies. Different types of finance include personal, family, corporate, and public finance, all crucial for economic stability and growth.

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9 views2 pages

Finance

Finance, derived from the Latin word for 'end', involves the management of capital flows among individuals, companies, and states, focusing on money and capital markets, investments, and financial management. Its evolution spans from the traditional approaches of the 14th century to modern strategies emphasizing market value and decision-making in companies. Different types of finance include personal, family, corporate, and public finance, all crucial for economic stability and growth.

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Finance

Comes from the Latin word ‘’finís’’, that means end or finish. Are the activities related to
the flows of capital and money between individuals, companies or states. That is to say,
deal with the conditions and opportunity to gets the capital, the uses of this, and of
payments and interests that are loaded to transactions in money.
Finance is composed of three financial aspects:

 Of money and capital markets: in this area must have knowledge of the economy in
general, that is, learn to identify factors that support and affect the economy.
 Investments: How money is handled.
 Financial management: Aims to expand the money and handle the sales and
expenses properly to achieve profitability.

Origin and Evolution


During the XIV and XV centuries in Italy used the term finances to deal with the payment
in money. In the twentieth century finance could be separated from the economy and
explored independently, identifying these stages:
Traditional Approach:
 Principles of the twentieth century: The growth of companies generated interest in
the study of capital markets and the financial problems that these entities could
have.
 1920s: The development of the industrial activity allowed the profits and decrease
of the financial problems.
 1930s: Due to the emergence of the crisis of 1929, finance focused on ensuring the
survival of the companies.
 In the forties: Finance focus on the selection of the appropriate financial structures
due to the crisis of the Second World War.
 In the fifties: Changes of the companies oblige the finance to focus on the liquidity
and profitability. Joins the informatics in the field of study.
Modern Approach:
 1960s: The attention focuses on the relationship of the profitability of assets and
cost of financing.
 1970s: The objective of the finances are based on maximizing the market value of
the company to the owners.
 The 1980s: attention is given to the imperfections of the market and its effect on the
companies, in addition to the internationalization.
 Last decade of the twentieth century and early twenty-first: Finance is considered
important to make decisions in companies.
Types of finance:
 Personal: The way in which we relate to our environment through the money
(planning, expenses, investments, income and savings).
 Family: Income and expenses in the family.
 Corporate: The way that companies create value and how it can maintain its
financial resources through policy directions, investment and financing.
 Public: Related to the State, to maintain a stable economy through the study of the
management of incomes and expenses that they perform.
The importance of finance is that it is key to survival in any area in which we are
(professional, personal), because it focuses on managing correctly and successful capital
essential for the growth of companies, and helps to combat the economic crisis.

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