Finance can be defined as the management of the flows of money through an organization, whether it be a corporation, school, bank or government agency. In general term, finance is the management of money. Finance concerns itself with the actual flows of money as well as any claims against money. In other words, finance can be defined as the art and science of managing money. Virtually all individuals and organization earn or raise money and spend or invest money. Finance is concerned with the process, institutions, markets and instruments involved in the transfer of money among and between individuals, business and governments.
In an endeavor to make optimal decisions, the financial manager makes use of certain analytical tools in the analysis, planning, and control activities of the firm. Financial analysis is a necessary condition or prerequisite for making sound financial decisions. One of the important roles of a chief financial officer is to provide accurate information on financial performance.