Finance is a broad term used to describe things regarding investments, the creation, management, and distribution of financial resources. Finance is used to describe the activities of individuals and organizations that deal with finances. In monetary terms, finance is the difference between total assets and total liabilities. The total assets minus total liabilities are referred to as net worth. It is the difference between what is owed and what is made available.
Modern accounting distinguishes five distinct categories of financial activity: investment, business, financing, consumption, and personal assets or liabilities. Within these five categories, there are several subcategories, such as business growth, business financing, government finance, private finance, and financial stability. In addition, there are numerous other categories that make up the world of finance, including investment banking, venture capital, derivatives, insurance, international finance, mortgage banking, and household finance. Finance also includes nonfinancial activities such as asset management, asset protection, health care, industrial organization, and insurance.
Finance has a significant effect on the overall performance of the economy. Therefore, understanding the methods and principles of accounting is important to a person’s job marketability in the business world. While most people think of accountants as the smart people who create statements that show how much money they made last year, in reality accountants provide a vital role in the economic process. Accountants analyze and interpret financial information to give managers and owners accurate information about the health of their company and the possibility of future growth. They can help create policies that will increase profitability and prevent business failures by helping to properly gauge a company’s financial position.
A four-year university degree in accounting and a corresponding finance concentration or certificate program is necessary to become eligible for entry level positions in the business world. Most companies prefer to hire graduates because they have a wide base of knowledge in finance and have more experience applying financial theories to real world problems. This is especially true for start up businesses that need to know whether they are financially healthy to stay open or can afford to lay off key employees.
Graduates should seek a position in one of several fields in accounting or finance. Accountant positions usually involve analyzing financial data in order to provide a company with an accurate picture of its current financial situation and future projections. Accountants are also responsible for creating financial planning strategies and reporting these plans to management and investors. A typical accountant’s responsibilities include creating financial reports such as business and personal accounts, income and cash flows analysis, and forecasting financial results.
Finance graduates may decide to enter the business world in many different ways including working as accountants, analysts, or finance clerks. Someone who chooses to be a finance analyst is responsible for analyzing and interpreting financial information to produce reports that help managers make informed business decisions. Finance clerks work under accountants and prepare reports that support the managers’ decision making. A small amount of finance training is required to qualify for entry level positions in the business world, but this training will help any individual get their foot into the door of finance.
As one progresses in their career, the salary range in the finance field typically begins at about forty thousand dollars per year. Salaries increase in subsequent positions, but generally stay stable around this figure. Finance graduates can pursue a doctorate degree in finance in order to obtain higher salaries. In addition to earning a doctorate degree, individuals can complete additional post-doctorate studies that will prepare them for specific areas within the business world. Many doctorate degrees require the students to take specialized classes such as financial theory, statistics, and accounting.
Many individuals pursue diverse finance careers, ranging from private investment to Wall Street investment. While these professionals may choose to work directly with large corporations, some choose to become financial advisers to private citizens. Financial advisers advise people on investments, insurance, retirement accounts, and general financial matters. There are various finance degrees to select from depending on the level of detail that an individual wants to learn. Individuals interested in a wide variety of finance careers should consider a degree in finance to broaden their options.