Finance
MT17-05
Jan Clark
10/15/2011

Finance is the study of money, both inflow and outflow of cash. Finance deals with how money is raised and used by businesses, governments and individuals. There are three general concepts everything else equal, 1) More value is preferred to less value 2) The sooner cash is received the more valuable it is 3) Less risky assets are more valuable than (preferred to) riskier assets (Cengage, 2011).
Everyone is affected by finance, whether that is in his or her personal lives or business. It is used for purchasing a house, a car, retirement and so on. You need to understand the Time Value of Money and how it can affect your business. Basically, the time value of money tells you that $1 today is worth more than $1 tomorrow. The reason is because you can invest that $1 today and have it be worth more tomorrow. You want to hold onto your money as long as possible and receive money as quickly as possible. You can do this by paying your bills right before they are due and finding ways to have your customers pay you as soon as possible. Then there is risk and return, the more risk you take, the more return you should expect. This is basically the level of risks you take. If you have a choice and the choices give you the same return, you should chose the one with the least amount of risk. Also if you are given a choice with the same level of risks, you should choose the risk with the highest level of return. There is proprietorship, partnership and corporation. The advantages to a proprietorship and a partnership are that they are easy to form and they have few government regulations. Some disadvantages are that the owners are personally liable for the company’s debt, the business has a limited life, transferring ownership is like buying a house, and raising large amounts of funds is very difficult. For