Business and finance both are correlated in some sense. As every business needs finance for growth. Business finance together is quite an elaborated area as this area is a key source of every organization and considered as a cornerstone. It is a part Of funds in a business and credited and debited amount in a business. Business finance is being used for purchasing various assets such as land, building and machinery for the business.
Parts of Business Finance:-
These are the few topics which are considered as topic of business finance and these are as follows:-
- Capital markets: These are the areas where people invest their money in bonds, shares, stocks and other things.
- Financial management of working capital: It is a process of business where the company uses the optimum and effective use of their business assets for better cash flow.
- Capital budgeting and fixed asset management: It involves every procedure whether it is related to acquiring buildings, lands or other fixed assets or purchasing of vehicles such as trucks, cars and so on for the purpose of business.
- Short term and long term financing: Both of them are related to generation of amount through credit. Short term financing is done for purchasing of short term needs such as materials and so on whereas long term financing is needed for purchasing big things for a minimum period of 2 years.
- Cost of capital : It is related to the cost that business incurs while generating finances. It is related to the cost levied for borrowing funds, investing funds and so on.
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Laws associated with Business finance in India:-
There are various laws related to business finance in our country, some are correlated with the functioning, some with procedure and some with their working, some with employees and some with government.
Let us discuss few of the acts here:-
- Securities and exchange board of India act 1992 : This act is used for regulating the functioning of capital markets in India.
- The Finance act: This act is responsible for checking on income related details of the business and employees such as salary and so on and further works with rules and regulations for tax paying and slabs for tax.
- The companies act 1850: This act was originally incorporated in the year 1850 and has been amended a few times after that. This act mentions the basics about a company and few rules related to finances in it.
- Tax law: Tax law comes up with paying of taxes on income and related to income tax act which considers the amount payable on income generated and so on.
- Banking acts: Banks play the major role in the business finance and one has to comply with all the rules and regulations as per the banking acts in terms of financing any loans or saving money in the bank.