Liquidity ratio for a business is its ability to pay off its debt obligations. A good liquidity ratio is anything greater than 1. It indicates that the company is in good financial health and is less likely to face financial hardships. The higher ratio, the higher is the safety margin that the business possesses to meet its current liabilities. The […]
What Is a Good Liquidity Ratio?
Finance FAQs
What Is the Purpose of Finance? Finance involves borrowing & lending, investing, raising capital, and selling & trading securities. The purpose of these pursuits is to allow companies and individuals to fund certain activities or projects today, to be repaid in the future based on income streams generated from those activities. Without finance, people would not be able to afford […]
Is Finance an Art or a Science?
The short answer to this question is both. Finance As a Science Finance, as a field of study and an area of business, definitely has strong roots in related-scientific areas, such as statistics and mathematics. Furthermore, many modern financial theories resemble scientific or mathematical formulas. However, there is no denying the fact that the financial industry also includes non-scientific elements that liken it […]
History of Finance
Finance, as a study of theory and practice distinct from the field of economics, arose in the 1940s and 1950s with the works of Harry Markowitz, William F. Sharpe, Fischer Black, and Myron Scholes, to name just a few.234 Particular realms of finance—such as banking, lending, and investing, of course, money itself—have been around since the dawn of civilization in some […]
What Does Finance Mean? Its History, Types, and Importance Explained
What Is Finance? Finance is a term for matters regarding the management, creation, and study of money and investments. It involves the use of credit and debt, securities, and investment to finance current projects using future income flows. Because of this temporal aspect, finance is closely linked to the time value of money, interest rates, and other related topics. Finance can be […]
Types of Finance
Individuals, businesses, and government entities all need funding to operate. Therefore, the finance field includes three main subcategories: Personal finance Corporate finance Public (government) finance 1. Personal Finance Personal finance is specific to an individual’s situation and activity. Therefore, related financial strategies depend largely on a person’s earnings, living requirements, goals, and desires. Financial planning involves analyzing the current financial position of individuals to formulate strategies for […]