Money is not everything but everything needs money. This article encompasses the best sources and everything you need to know about Financial resources.
#.1 Definition of Financial Resources.
Financial Resources are funds set aside to carry out the current estimated price, investments, and expenditure for both businesses and individuals. It is the money involved in encouraging employees. It also refers to the money for maintenance, consumption, and growth of the economy.
#2. Types of Financial Resources.
These are categories of existing funds whose usage is relative to the dimension of the organization. Since Financial Resources buttress an organization’s capacity to be in debt and simultaneously show invested assets, we can classify it into the following types:
- Liquid funds: This includes cash, its equivalent and the likes of cheques and bank deposit.
- Business capital: this is the total investment of the organization, its net worth and other resources.
#3. Examples of Financial Resources.
Financial Resources is the money you are willing to spend. It involves raw cash, valuable properties, loans, and any other funds. These are the funds that we invest, spend, and return we get in transactions.
#4. Importance of Financial Resources.
The level of Financial Resources decides where and how you live. Money gives you the freedom to choose your own path, start a business, and create employment. It helps you give your family a sound education, best health care and enables you to have control over your own life. It guarantees comfortability in solving the insatiable problems of life, one’s daily needs/wants, and imminent emergencies.
#5. Financial Resources in Business.
Trade by barter and some other practices are older forms of doing business. However, funds availability is the new deal and it benefits us by the following:
- Serves as a medium of exchange.
- Used as a store of value.
- It is a standard for measuring value.
- Serves as a standard for deferred payments.
- It transfers value.
#6. Financial Resources in Education.
You attain quality education when you have sufficient finances. Nevertheless, the lack of This knowledge in education can be seen in the lack of school building, its management, and the underpayment of teachers. Of course, without Financial Resources, you can’t buy your learning materials. Nowadays, it is a yardstick for any child seeking formal education.
#7. Adverse Effects of Financial Resources.
In reality, knowledge is power. So tentatively, lack of funds is the basic reason for school dropouts. Again, the level of education in a country determines its future. Therefore, most nations have sectors in charge of education for both governmental and non-governmental organizations.
A) Representatives for adequate Financial Resources in education.
Nonetheless, aside from the government, there are partners that aid to reform the insufficiency in education and they include the MTN scholarship programs, Tony Elumelu Foundation, the ‘Save The Children’ program in Thailand, and every other individual or cooperation that provides subsidy in the academic field.
B) Inadequate Financial Resources.
When you do not have much money, choices may be something you can’t afford. The lack of funds increases the death rate because people can’t afford the medical care they need for survival. Inadequate Financial Resources bring frustration, increase in crime, and partly affect one’s future. It leads to a surge in the unemployment rate and brings a drastic fall of a nation.
On a steady, the insufficiency in Finances reflects in the total economic growth of a country that’s why tax payment, budget, and other monetary policies are made to ensure maintain a level of Financial Resources available for distribution.
#8. Financial Resources Management.
However, Financial Resource management is the process of planning, harnessing, and also monitoring funds in other to attain the goal and objectives of cooperation. In addition, managing legal tender has been challenging but should be inevitable for those that want to avoid a money crisis.
Types of Financial Resources Management:
1) Capital Budgeting:
Basically, these are the investments in long-term assets for the firm’s gain. Meanwhile, It involves business plans for a long-term capital outline that demands huge amounts, risks management, and can’t be changed over time.
2) Capital Structure:
It refers to decisions made to increase the shares of wealth owners. however, Mathematical models like the cost of capital constituents, EBIT analysis, and different financial alternatives to define the breaking point used.
3) Cash-Flow Analysis:
This involves cash as a result of investing activities during a specific time and the sheet balancing between the opening and the closure.
4) Ratio Analysis:
This is the independent future of different expressions. hence this summarizes the report data and aids in making the firm’s decision. Eventually, The comparison between the old and new ratios indicates the firm’s positive and negative impacts. Under this, the trend ratio is exceptional because it records the movement of financial statements for more than one accounting era.
Read More: Financial Management
#8. Sources of Financial Resources.
On the other hand, the sources of these funds are different and depend on the origin of generation, time, and ownership. Nevertheless, some of these processes require in-depth thinking and creativity. Moreover, the sources include work, capital, incomes, loans, equity, and debentures.
FAQ
Is cash a financial asset?
A financial asset is a liquid asset that gets its value from a contractual right or ownership claim. Cash, stocks, bonds, mutual funds, and bank deposits are all are examples of financial assets.
Is time a financial resource?
Resources can be described as assets (time, money, energy), materials, or capital (other funds) that can be used to accomplish your goal. What are your financial resources? … and physical assets such as cars, homes, or personal possessions.
Is Bitcoin a financial asset?
Cryptocurrencies are not financial assets. They also lack physical substance. Therefore, they meet the definition of an intangible asset and would be recorded at acquisition cost (i.e. price paid or consideration given).
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