FEATURES OF FINANCE

The main characteristics of feature of finance are depicted below.

1. Investment opportunities: in finance, investment can be explained as a utilization of
money for profit or return. Investment can done by- creating physical assets with the
money, carrying on business activities and acquiring financial securities. Investment
opportunities and commitments of monetary resources at different times with an
expectation of economic return in the future.
2. Profitable opportunities : in finance, profitable opportunities are considered as
important aspiration (goal). Profitable opportunities signify that the firm must utilize its
available resources most efficiency under the conditions of cut-throat competitive
markets. Profitable opportunities shall be a vision . it shall not result in short term
profits at the expense of long term gains.
3. Mix of funds optimal: finance is considered with the best optimal mix of funds in order
to obtain the desired and determined results respectively. Primarily, fund are of two
types, namely : owned funds (promoter contribution, equity shares, etc),
The composition of funds should be such that it shall not results in loss of profits to the
entrepreneurs and must recover the cost of business units effectively and efficiently.
4. System of internal control: finance is considered with internal control maintained in the
organization or work place. Internal controls are set of rules and regulations framed at
the inspection stage of the organization, and they are altered as per the requirement of its
business.

5. Future decision making : finance is considered with the future decision of the
organization. good finance is an indicator of growth and good returns. This is possible
only with the good analytical decision of the origination. However ,the decision shall be
formed by giving more emphasis on the present and future perspectives respectively.
6. Financial statements : financial statements are the formal records of financial activities
of a business person or the other entity. Financial statements provides an overview of a
form easy to understand financial condition called the financial statements. There are 4
basic financial statements.
1 . balance sheet : it is also referred to as loss statement reports on companys assets,
liabilities and ownership equity as of a given point in time.
2. Income statements : it is also referred to as profit and loss statements reports on
companys income, expenses, and profits over a period of time. Profit and loss

account provides information on the operation of the enterprise. This includes sale
and the various expenses incurred during processing state.
3. Statements of retained earnings : it explains the changes in a companys retained
earnings over the reporting period.
4. Cash flow statements : it reports on a companys cash flow activities ;particularly its
operating, investing and financing activities.

Dividend decision : the third major decision of financial management is the

decision relating to the dividend policy. The dividend decision should be analyzed in
relation to it. The finance decision or to be retained in the business. This decision is
crucial for the firm due to many reasons. Retained earnings are cheaper compared to
external funds ,