Finance Effects Economy Essay Example | Topics and Well Written Essays - 1000 words

Finance Effects parsimoniousness - Essay ExampleA pay student studies a bachelor degree in backup administration with a major in finance. The purpose of this paper is to discuss and describe the history of finance, how it affects the economy, and areas of strong point in finance. The field of finance as we know it today began in the 1950s. When finance knowledge started it was very much part of the curriculum of economics or a part of business administration. Today the focus of the finance major is integrated as part of a business administration education. The majority of undergraduate finance degrees in the U.S. are part of a business curriculum, but at the graduate level finance is a great deal taught based on the economic approach (Miller). One of the primary focuses of a finance education is to teach students how to make better decisions. Finance professionals are supposed to be able to maximize shareholders wealthiness (Besley & Brigham). The finance field is often refer red to as the cousin of business relationship system due to the fact that a disseminate of the concepts and data used in finance come from accounting information. Many small companies integrate the accounting and finance departments. Two extremely important fiscal concepts in finance, risk and return, were first introduced to the general existence by Harry Markowitz in 1952 in his publication Portfolio Selection published in the Journal of Finance. The devise finance people perform in an organization is very important. For instance once the accountant completes the accounting cycle and prepares the financial storys the finance people can analyze the information to determine the financial executing of the company. The four major financial statements are the income statement, balance sheet, statement of retained earnings, and statement of cash flow. The income statement measures the profitability of a company, while the balance sheet illustrates the financial condition of a com pany at a specific point in time. The statement of cash flow is composed of three sections operating, financing, and induements. The financial statements for the entire fiscal year are included within the contents of the annual report. Public companies besides release quarterly financial statements to comply with the regulations of the Security and Exchange Commission (SEC). Three financial epitome the can be used to analyze the financial statements are ratio synopsis, vertical analysis, and horizontal analysis. dimension analysis is a tool that is often used by finance professionals. The five categories of ratio analysis are liquidity, solvency, profitability, activity, and coverage ratios (AccountingExplained). Horizontal analysis can be used to compare the different items or elements of the financial statements against the performance of the previous accounting period. The objective of vertical analysis is to report each aggregate or item in the financial statement as a per centage of another item. When acting vertical analysis on an income statement all the items of the statement are typically compared against the sales summation of the company. The discipline of finance can also be used for other analytical purposes. Financial managers often have to evaluate the firms valuation and the valuation of other companies that the firm might invest in. A financial model to evaluate the risk of a