Functions and Classification of Business Finance in Dissertation

Business finance plays an essential role in the growth of any organisation. So, students of business studies must study this branch attentively. Also, they must write assignments on it. However, many students find the functions of business finance quite complex. So they can get finance dissertation help to write a scoring dissertation. However, you must understand the functions and classifications of funds to write your dissertation paper well. Also, such knowledge will help you a lot in your study. So, today, you will conduct a detailed account of these matters to understand business finance and write a dissertation. Read on to know more-

What Is Business Finance?

In simple words, business finance is the study of managing an organisation's money and other finances for steady growth. Therefore, it includes certain activities like making budgets, raising funds, analysing financial performances, etc. Besides this, business finance also discusses the resources of money for a business so that it can profit more and minimise any kind of monetary risks.

What Are the Useful Functions of Business Finance?

Now, you have some idea about business finance. To understand it more, you must focus on its functions. Here are some of the amazing functions of business finance you must know well. Have a look-

Capital Budgeting

This is an important function of business finance. It shows the opportunities for potential investments. Thus, you get to know the right projects to work on. Also, capital budgeting helps people understand the profitability and risk factors of the projects before allocating resources. Thus, businesses can estimate the RoI. The essential steps of capital budgeting are-

Knowing where to invest

Analysing the cash flow system

Understand the risk and return

Choosing the most effective projects

Fund Raising

This is one of the primary functions of business finance. Fundraising means securing the proper amount of funds for the business operations. A business can raise funds through different ways, like debt, equity, etc. Fundraising depends on the condition of the business in the market and also the financial strategies. Popular companies follow the following methods of fundraising-

Getting loans from banks

Issuing bonds or shares

Arranging crowdfunding or grants

Getting capital and private equity

Working Capital Management

This function of business finance ensures that a company must have enough liquidity to meet short-term obligations. Therefore, it includes managing the company's cash flow. Also, it manages the inventory and the accounts. Here are the key components of capital management-

Reducing the turnover time

Optimising the inventory level

Managing the payable cycles

Ensuring the constant cash flow

Risk Management

Business finance is also the study of identifying and solving financial risks. Such risks can arise from interest rates, market conditions, currency rates, etc. One must understand effective risk management to handle such conditions. Thus, a company will be saved from financial losses. To keep companies safe from risks, companies can plan the following strategies-

Diversifying investments

Having insurance policies

Establishing contingency services

So, these are the essential functions of business studies you must understand. There are many other functions of business finance that you will read under law dissertation topics. But here, we have covered the important ones. If you are a student of business studies, knowing these will help you prepare for exams, too. Now, you must know about the classification of its funds in the next section.

Classification of Its Funds

The business funds can be classified based on several criteria, such as sources, ownership, etc. Once you understand these classifications, you can pick the right fund for your business. Have a look-

Classification Based on Time

Based on time, the funds can be classified into the following sections like-

· Short-Term Funds: These are for quick business operations. A business person can use such funds to buy inventory. Also, he can provide salaries to the employees and pay all the bills with this fund. Such funds come with a repayment period of around one year. Some examples of short-term funds are trade credit, short-term loans, bank overdrafts, etc.

· Medium-Term Funds: This type of fund is for financing any project. It comes with a repayment period of between one and five years. Businesses can use these funds to run different operations. Also, they can use it to update technologies and buy different machinery. The best examples of medium-term funds are leasing, term loans, etc.

· Long-Term Funds: These types of funds are a kind of investments. It comes with a repayment period of more than five years. Such funds are important for expanding your business on a large scale. Businesses also use it to develop infrastructure and conduct research. Some of the best examples of long-term funds are debentures, long-term loans, equity capital, etc.

Classification Based on Ownership

Now, the funds can be classified based on the ownership. So, you must know about these classifications, too. Have a look-

· Owned Funds: It means the funds the owners or shareholders provide to the business. It is not subject to repayment. Some examples of owned funds are share capital and retained earnings.

· Borrowed Funds: Here, business owners borrow funds from outsiders. So, they must repay the amount with the interest. These funds help to form the debt portion of a company. Some of the best examples of borrowed funds are bonds, bank loans, etc.

Classification Based on Sources

Classification of funds can be based on sources too. Here are those for your knowledge. Have a look-

· Internal Sources: Internal sources can be from the profits. Business owners do need to borrow from outside.

· External Sources: As the name suggests, here, business owners can borrow from outside the organisation. Here, you may need to make a repayment.

Conclusion

So, here you get thorough information on the functions of business finance and the classification of funds. Instead, we talked about the essential functions of business finance. Once you know about it, you can write your dissertations quite well. Also, the classifications of funds give you detailed ideas about the study. You can take finance dissertation help to write your assignment. So, the knowledge can help you write your paper and prepare for exams.