Summary
Finance studies the process of money circulation, that is, the way of obtaining and managing funds. It refers to the search for an increase in profits without investing more than is advisable, that is, minimizing the risks of the investment. If the investor is willing to face greater uncertainty, his earnings may be higher. Implementing adequate strategies to take advantage of the economic resource would generate their optimization, thus obtaining a more profitable economic return. Each entity chooses its sources of financing according to the one that provides the greatest benefit.
Abstract
Finance studies the process of money circulation, the method of production and administration of funds. It refers to the search to increase profits without spending more than is wise, minimizing the risks of the investment. If the investor is willing to affront more uncertainty, his earnings will be higher. Implementing appropriate measures strategies to take advantages about the economic resource, it generates optimizing them, as consequence obtaining a more profitable economic performance. Each entity chooses its sources of financing in order the best benefit provides.
Introduction
Since the creation of empires and monarchies, finance has been of great importance in terms of the administration and investment activities of the economic resource of society.
Despite the existing need to know how to manage the economic resource individually and collectively, let's talk about a region, state or nation; Most people do not care about knowing at least the fundamentals that govern finances in order to establish a budget, know when it is convenient to carry out investment activities and analyze economic activities generally, which would improve personal and collective economic performance according to the situation presented.
This research presents a theoretical framework of basic conceptualization on finances that will help to understand elements for the realization of a study on the degree of basic knowledge in finance of the students of the Spanish College of the Southeast, located on Boulevard 28 de August N ° 608 Fracc. Foviste Jardín Corona in the city of Tuxtla Gutiérrez, Chiapas; Through this, it is intended to implement a culture of knowledge for basic financial aspects that in many occasions do not present a degree of interest on the part of students, which will subsequently gradually serve them in carrying out school projects and generally in the application and administration of the monetary resource. daily, to generate higher performance.
Theoretical framework
Background
Thinking about the development of the financial system necessarily moves to the stage where transactions were carried out through barter. At that time there was only the market for real goods, in which people exchanged goods and traded with grains or spices. Assets that kept their characteristics for a longer time were given greater value because in this way wealth was preserved. At that time money did not exist physically, therefore there were no financial assets, therefore there were no financial investments.
(TOLEDO, 2012) When money was introduced as a medium of exchange, people were able to acquire it to acquire other goods or save it for future exchanges.
Then the possibility arose of, in addition to saving the money, investing it for a certain time in exchange for a prize for that decision. So a person could decide not to consume now to consume more goods in the future. If the prize for investing money for a year was 10%, for example this meant that in the future it would increase the opportunities to acquire goods by 10%. The possibility of making decisions existed insofar as someone preferred to consume now, with the money borrowed in exchange for paying in the future.
Whenever someone invests money, there is another who asks for a loan, and the prize that the investor receives is an interest rate on the original capital, called yield, which represents a cost for those who take the resources as a loan.
This is how the concept of money arose and consequently the financial markets, which together with the real goods market, constitute the means in which individuals and companies carry out economic transactions.
Importance of finance
One of the most important elements for the management and formation of new companies, which allows them to take advantage of opportunities to grow, employ local labor, and in turn support other companies and local, state and federal government through referral. of income taxes is finance.
The ideal use of financial instruments and loans and investments with the key to the success and economic growth of an organization.
Financial trends, on the other hand, also define the state of the economy at the global level, so that central banks can plan monetary policies.
To run a business, companies need an endless variety of assets, which can be tangible, such as machinery, factories, and offices; and intangibles such as trademarks, technical knowledge and patents, there is the need for finance, since through it it will be possible to obtain the money necessary for their operation and growth.
(DUFF, 2014) When any element of the financing process breaks, companies go bankrupt and the economy moves towards recession, that is, if the financial system of an organization is not working correctly, the flow of money slows down. or stop.
All facets of the world economy depend on an orderly process of finance. Capital markets provide the money to support companies, and businesses provide the money to support people. Even the arts benefit from finances, because they get their money from corporate sponsors and individual clients. In this way a chain is established starting with the capital markets who create the money, the businesses that distribute it continue and finally the individuals and institutions who spend it.
Finance scope
Finance is divided into three main areas:
a).- Investments
This branch focuses on how to make and manage an investment in financial assets and in particular what to do with a surplus of money when you want to invest it in the financial market. By owning a share, you own a financial asset, as you get the right to collect an amount in the future. The holder of these shares is called an investor and those who suggest where to invest these surpluses are called promoters or investment analysts.
b).- Institutions and financial markets
Financial institutions are companies that specialize in selling, buying, creating securities and securities that are financial assets for investors and liabilities for companies that take the resources to finance themselves.
Financial markets are the spaces where financial institutions act to buy and sell credit securities, such as stocks, bonds or commercial paper.
c).- Corporate finance or financial administration of companies.
The financial administration of companies studies three aspects: investment in real assets, financial assets and temporary cash surpluses, obtaining the necessary funds for investment in assets and decisions related to reinvestment of profits and distribution of dividends. A company is an independent economic entity that owns assets that it has acquired through contributions from shareholders and financing from creditors.
The role of the financial manager
(BRELEY, 1998) Referring as financial manager to the person responsible for a significant decision regarding investment or financing in the company.
The treasurer is normally the person directly responsible for obtaining financing, managing accounts and financial relationships. In mid-sized companies, there is regularly a head of control and management who inspects the money management made by the treasurer and verifies that it is being used for what it has been intended for. Larger companies typically appoint a deputy chief financial officer, who is deeply involved in the design of financial policy and financial planning, and oversees the work of the treasurer and the head of management control.
Among the most important functions that a financial manager performs are the following:
- Treasury management. Obtaining financing. Credit management. Payment of dividends. Insurance. Preparation of budgets. Preparation of financial statements. Keeping of records. Internal audit. Relationship with banks and financial institutions.
Topics that everyone should know about finances
Finance Concept:
Finance is a branch of economics that is related to the study of investment activities, both in real and financial assets and their administration.
Goal of an administrator:
The main objective of an administrator is to generate wealth for the shareholders of the company, which is measured based on return per share at book value and return per share at market value.
Responsibilities of a financial manager:
- Budgeting and long-term planning Making investment and financing decisions on capital and inventories Managing receivables and cash Coordinating and controlling company actions Establishing and managing relationships with financial markets Evaluating investment projects with a focus on corporate social responsibility.
Personal finances:
Personal finance is the application of finance and its principles of a person or family in their desire to carry out their activities with the best distribution of money for it. You must distribute your income between education, health, clothing, insurance, food, transportation, luxuries, etc. Income, expenses, savings should be taken into account and future risks and events should always be established. Part of finance is checking, savings accounts, credit cards, loans, taxes, etc.
Budget:
The budget is defined as an integrating and coordinating plan, which is expressed in financial terms regarding the operations and resources that are part of a company for a given period, in order to achieve the objectives set by senior management.
To prepare a budget, the following are the requirements:
- Perfect knowledge of the company Budget plan or policies to follow Coordination to execute the budget plan Set a budget period Adequate management and oversight
A budget must be applied based on formulation, presentation and application rules, also called operation. The process of generating an annual budget begins with a sales budget that ultimately leads to the generation of budgeted financial statements.
Performance:
The amount that the investor receives, that is, an interest rate on the original capital.
Financial risk:
It is the risk of not covering financial costs and is associated with the growth of the company's fixed financial costs, in exchange for which an increase greater than that predicted by the model is obtained.
Financial uncertainty:
It is a particular case of risk that occurs when there is no historical background of the probabilities of occurrence of events or situations, therefore an objective probability of occurrence cannot be determined.
Financial expenses:
All those expenses that an economic subject incurs, to obtain, use or return financial capital made available to them by third parties.
Investments:
They represent the placements of money on which a company expects to obtain some future yield, either by the realization of an interest, dividend or by selling at a higher value at its acquisition cost.
Saving:
Saving is the part of income (national, family or personal) that is not used to purchase consumer goods.
Financial savings:
Set of profitable assets issued, both by the financial system and by the government, that have been accumulated over time. Savings are determined based on the following aspects:
- Magnitude of income, Certainty of future income, Degree of forecast of the future, Current income level, Interest rate, Expectations on the evolution of future prices, Salary, Inflation.
Financing:
It involves the way in which a company acquires the necessary resources to carry out investment decisions.
Study methodology
Kind of investigation
“The qualitative inquiry process is flexible and moves between events and their interpretation, between responses and the development of theory. Its purpose is to reconstruct reality as observed by the actors of a previously defined social system. It is often called holistic, because it prides itself on considering the "whole," without reducing it to the study of its parts. " (Hernández Sampieri & Hernández Collado, 2008).
Two variants will be used in this research: descriptive and exploratory.
As Hernández (2010) says, “Descriptive studies seek to specify the properties, characteristics, and profiles of people, groups, communities, processes, objects, or any other phenomenon that is subjected to an analysis. In other words, they only seek to measure or collect information independently or jointly about the concepts or variables to which they refer, that is, subjective is not to indicate how they are related. ”
In this research, the qualitative approach is applied describing all its dimensions, in this case the object to be studied is described, which is the level of knowledge in Finance of the students of the Spanish school of the southeast in Tuxtla Gutiérrez, Chiapas. In this study, the questions must be answered: What happens? Who is it happening to? Where does it happen? And when does it happen? This study will resort to specific techniques in the collection of information, such as observation, interviews and questionnaires. Descriptive studies focus on collecting data that describes the situation as it is.
On the other hand, exploratory studies points out Hernández (2010) “Exploratory studies are carried out when the objective is to examine a topic or research problem little studied, about which there are many doubts or have not been addressed before. In other words, when the literature review revealed that there are only unresearched guides and ideas that are loosely related to the study problem, or if we want to inquire about topics and areas from new perspectives. ”
Population to investigate
The investigative part is focused on university students from the Spanish school in the southeast, with address at Boulevard 28 de Agosto N ° 608 Fracc. Foviste Jardín Corona in the city of Tuxtla Gutiérrez, Chiapas; Through this, it is intended to implement a culture of knowledge for basic financial aspects that in many occasions do not present a degree of interest on the part of students.
Information gathering techniques and instruments
In order to carry out the collection of information, informal interviews will be conducted with the students, due to the lack of time between their classes and factors such as practicality when answering it, being careful in the design and when addressing the persons who will answer said instruments; in order to obtain relevant information and more attached to the objectives of the research.
Analysis and interpretation
After having obtained information on the perception of the students of the Spanish school of the southeast about finances, it is possible to notice the lack of knowledge in the subjects related to administrative accounting and finance respectively, since on average only 40% of Students know the fundamentals of financial management, only 30% know at least two financial statements, and few know the terminology used by a company regarding financial risks, uncertainty, means of financing, investments and financial savings to mention the concepts that have been raised.
Proposal
It is proposed to the Colegio Español del Sureste to improve the structure of its study program in the subject of financial administration, project evaluation and administrative accounting, to mention those that are more related to the current object of study.
The students have said that during the course they have not seen topics related to investments of any kind, sources of financing and budget. For which it is proposed either the improvement of the study program or the revision of the classes taught by the teachers to check if they are complying with the guidelines established by the institution and assess whether they are abiding by the methodology proposed by it.
conclusion
This research has allowed us to establish topics that any university student should know about finance, and it has also allowed us to know the level of knowledge about basic financial topics based on background, evolution, investment conceptualizations, income, uncertainty, risk and financial savings.
Over time, finances have allowed man the correct administration of economic resources and has provided the knowledge of the ideal financing strategies to achieve the desired success in the business world.
In conclusion, it is stated that a financial administrator must know how to do the following activities:
- budgeting and long-term planning, making investment and financing decisions on capital and inventories, managing pro-receivables and cash, coordinating and controlling company actions, establishing and managing relationships with financial markets.
Bibliography
- BRELEY, RA (1998). PRINCIPLES OF CORPORATE FINANCE. MADRID: MC GRAW HILL.DUFF, V. (13 de 10 de 2014). SMEs: IMPORTANCE OF FINANCE AND ITS ROLE IN BUSINESS. Oklahoma, UNITED STATES OF AMERICA Hernández Sampieri, R., & Hernández Collado, C. y. (2008). RESEARCH METHODOLOGY 4th EDITION. MC GRAW HILL.TOLEDO, MA (2012). FINANCIAL ADMINISTRATION CORRELATED WITH THE NIF 3rd EDITION. MEXICO, DF: MC GRAW HILL.
