Finance is a term in the business world that you are probably already familiar with. Many people assume that finance has the same meaning as finance. So what is finance? Finance, in its broadest sense, is a field of economics that focuses on finance. The word finance itself comes from English, namely financial. When interpreted, finance is finance. In Big Indonesian Dictionary (KBBI), finance means something that deals with finance. However, upon closer inspection, the discussion of finance is not just about financial conditions, which exist on a large scale. Quoted from Investopedia, Finance is a term for things related to the management, creation and study of money and investments.
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What is Finance?
Finance is defined as the management of money and includes activities such as investing, borrowing, lending, budgeting, saving, and forecasting. There are three main types of finance: (1) private, (2) corporate, and (3) public/government. This guide will unpack the question: What is finance?
Video explanation of finances
Watch this short video to quickly understand the key concepts covered in this guide. It explains the definition of finance, provides examples of finance, and covers some of the common finance topics.
Examples
The easiest way to define finance is to give examples of the activities it includes. There are many different career paths and jobs that perform a wide range of financial activities. Below is a list of the most common examples:
Invest personal money in stocks, bonds, or guaranteed investment certificates (GICs).
Borrowing from institutional investors by issuing bonds on behalf of a public company
Borrowing money from people by providing them with a mortgage with which to buy a home
Using Excel spreadsheets to create a budget and financial model for a business
Save personal money in a high-interest savings account
Development of a forecast for government spending and revenue collection
Financial people at work
Financial topics
There are a variety of topics that concern people in the financial industry. Below is a list of some of the most common topics you should expect in the industry.
Interest rates and spreads
Return (coupon payments, dividends)
Annual financial statements (balance sheet, income statement, cash flow statement)
Cash flow (free cash flow, other types of cash flow)
Profit (net income)
Cost of Capital (WACC)
Returns (IRR, ROI, ROA)
Dividends and return of capital
Shareholders
Value creation
Risk and return
Behavioral Finance
Financial careers
A definition of finance would not be complete without examining the career opportunities associated with the industry. Below are some of the most popular career paths:
Advertising technology
Personal Banking (or Private Banking)
Investment banking
Asset management
Corporate financing
Mortgages/loans
accounting
Financial planning
Treasury
Test
Stock research
Insurance
CFI Finance Career Map
Additional financial resources
To further develop and prepare for a career in this field, these additional CFI materials will be helpful:
Free course on the basics of corporate finance
Types of financial models
Interactive career map
Compensation and Salary Policies
The Trifecta® Analyst’s Guide
More questions and answers
CFI’s mission is to help everyone become a world-class financial analyst and has a wide range of resources to support you on your journey. To become a great financial analyst, below are some additional questions and answers you can explore further: