Theme of the lecture №12. Finance of enterprise

1. The nature and function of finance companies

2. The financial resources of the company

3. The time value of money

4. Forms of financing

1. Finance is the study of how investors allocate their assets over time under conditions of certainty and uncertainty. A key point in finance, which affects decisions, is the time value of money, which states that a unit of currency today is worth more than the same unit of currency tomorrow. Finance aims to price assets based on their risk level, and expected rate of return. Finance can be broken into three different sub categories: public finance, corporate financeand personal finance.

2. In economics a resource is defined as a commodity, service, or other asset used to produce goods and services that meet human needs and wants (see economic resource). Economics itself has been defined as the study of how society manages its scarce resources. Economics focuses on resource supply and demand as it influences production of goods and services to meet human needs and wants. Classical economics recognizes three categories of resources: land, labour, and capital. Together with entrepreneurship, land, labour, and capital. Land includes all natural resources and is viewed as both the site of production and the source of raw materials. Labour or human resources consists of human effort provided in the creation of products, paid in wage. Capital consists of human-made goods or means of production (machinery, buildings, and other infrastructure) used in the production of other goods and services, paid in interest. Entrepreneurs serve as managers, risk-takers, leaders, and visionaries.

Financial capital is money used by entrepreneurs and businesses to buy what they need to make their products or provide their services or to that sector of the economy based on its operation, i.e. retail, corporate, investment banking, etc.

Financial capital or just capital in finance and accounting, is funds provided by lenders (and investors) to businesses to purchase real capital equipment for producing goods/services. Real capital or economic capital comprises physical goods that assist in the production of other goods and services, e.g. shovels for gravediggers, sewing machines for tailors, or machinery and tooling for factories.

3. The time value of money is the value of money figuring in a given amount of interest earned over a given amount of time. The time value of money is the central concept in finance theory. For example, $100 of today's money invested for one year and earning 5% interest will be worth $105 after one year. Therefore, $100 paid now or $105 paid exactly one year from now both have the same value to the recipient who assumes 5% interest; using time value of money terminology, $100 invested for one year at 5% interest has a future value of $105. The method also allows the valuation of a likely stream of income in the future, in such a way that the annual incomes are discounted and then added together, thus providing a lump-sum "present value" of the entire income stream. All of the standard calculations for time value of money derive from the most basic algebraic expression for the present value of a future sum, "discounted" to the present by an amount equal to the time value of money.

4. A subsidy is assistance paid to a business or economic sector or producers. Most subsidies are made by the government to producers or distributed as subventions in an industry to prevent the decline of that industry (e.g., as a result of continuous unprofitable operations) or an increase in the prices of its products or simply to encourage it to hire more labour (as in the case of a wage subsidy). Examples are subsidies to encourage the sale of exports; subsidies on some foods to keep down the cost of living, especially in urban areas; and subsidies to encourage the expansion of farm production and achieve self-reliance in food production. Subsidy has been used by economists with different meanings and connotations in different contexts. The dictionary [Concise Oxford] defines it as "money granted by state, public body, etc., to keep down the prices of commodities, etc.”. Environmental economists define subsidies as uncompensated environmental damage arising from any flow of goods and services. In a budgetary context, it may be defined as “unrecovered costs in the public provision of private goods”.

Basic literature: 1,2,3,4,5,6,7,8,9.

Additional literature: 10,11,12,13,14,15,16.

Periodicals: 17-60