From the course: Finance Foundations (2019)
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Finance inside of companies
From the course: Finance Foundations (2019)
Finance inside of companies
What is finance? Let's start with a broad definition. First, when we're thinking about organizations, individuals, families, companies, governments, finance is identifying what things I need. Second, finance is determining how to get the money to buy those things. And third, finance is managing those things efficiently once I have them. Now let's drill down inside a company. First, how do I decide what things I need? Well, there are long-term decisions that need to be made. Do I need to buy some land, some buildings, some machines? That long-term decision-making process is part of finance. Short-term finance decisions include deciding: How much cash do I need? How much inventory should I have on hand? Should I let my customers buy on credit? Making those short-term decisions is part of finance. The short-term finance decisions also include deciding on operating items such as the appropriate number of staff, the right amount of research and development, the right amount of marketing…
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