Finance. It is related to the exchange and management of capital. Finances can be divided into public or private finances. Finance can have two meanings depending on how it is used, such as a verb or a noun. The verb means: to provide financing (funds) for a person or company. For example, “The project was funded by donations.” The noun means: the management or handling of money, especially in large amounts by governments or companies.
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- 1 Story
- 2 Concept
- 3 Financial Economic Analysis
- 4 Challenges of Cuban finances
- 5 Sources
Although the money exchange and exchange activity has always existed in human societies, we can say that the fifteenth century , with the rise of capitalism, is the central moment to be able to talk about finance as we know it today. It is at this time that banks, money changers, intermediaries and other characters or social actors responsible for this type of activity appear. At the same time, it is the twentieth century the century in which capitalism begins to focus its attention almost exclusively on financial activities, these becoming more important than the industrial or mercantile ones of other times.
According to the dictionary of the Royal Spanish Academy (RAE), the term finance comes from French finance and refers to the obligation that a subject assumes to answer for the obligation of another person. The concept also refers to flows, assets and public finances.
In everyday language, the study of the circulation of money between individuals, companies or different states is known as finance. Thus, finance appears as a branch of the economy that is dedicated to analyzing how funds are obtained and managed. In other words, finance takes care of money management .
The notion of personal finance refers, in principle, to the money a family needs for subsistence. The person should analyze how to obtain said money and how to protect it against unforeseen situations (such as, for example, a layoff). Other applications of personal finance refer to saving capacity, spending, and investment. Corporate finance, for its part, focuses on the ways that companies have to create value through the use of financial resources. Investment, financing, profits and dividend are some of the concepts related to this area.
Public finances are related to the fiscal policy of a State. The government obtains funds through the collection of taxes and reinvests that money in society through public spending (with the construction of hospitals and schools and the care of cleaning).
Economic financial analysis
Economic financial analysis
It plays a fundamental role, since it studies the content of the financial indicators, it offers the necessary information to know the real situation during the period of time selected, based on the statistical, accounting and financial data of the company, it favors the executives achieve agile economic controls in order to facilitate decision-making and have a more efficient administration, it also provides management with the necessary tool to control business management and make effective decisions that allow the subsequent course of action to be rectified or improved in the short, medium and long term.
It is also one of the phases of the Control Function in the direction of economic processes, the close relationship that exists between the two is because the Control function records and analyzes the fulfillment of the plans drawn up and acts in whatever way necessary to guarantee compliance, therefore these three moments (registration, analysis, and action) make up the different phases in which the control process is structured, there being a functional dependency, in the registration phase the operating rules are set and through it, the economic facts are reflected as you want them to behave.
Cuban finance challenges
In the period between 1960 and 1990, the development of finance, outside the socialist world, is vertiginous according to the objectives of the dominant capitalism in a group of countries. This has to do with the emergence of new financial theories, which derive in financial management techniques that use higher mathematics and computation.
This stage coincides with the establishment of the US blockade. Cuba, which we can circumvent for the collaboration and economic support of the Eastern European socialist camp, led by the extinct USSR. It is rational for Cuba to integrate into the financial technique used in that world, which responds to its needs. The studies of medium and university level, as well as the practice in the matter of finances in Cuba, correspond to this integration.
The disappearance of the socialist camp in Eastern Europe between 1989 and 1991, necessitates a redefinition of Cuba’s relations with the rest of the world, which includes the necessary update on the progress made in financial science and technique at the country level more developed, avoiding copying. Taking the financial instruments that these countries use today and adapting them to the objectives and needs of their economy is not easy and requires talent and dedication, but above all, full conviction in the principles of socialism.
Our development in the Science and Technique of finance now has two major challenges: financial risk and the financing structure (capital structure) of the company.
Living in a world where uncertainty prevails makes it unavoidable to develop ourselves in the Science of financial risk and in the Technique to avoid it. This way to be able to move safely in this aspect and spend our time optimizing efficiency in the other activities of the company.
The financing or capital structure of the company is decisive in optimizing the use of available external monetary resources (foreign currency) and in attracting new foreign currency, but also allows maximizing the remuneration rate of the true owners, who normally They are the common shareholders, who in the case of Cuba represent the Cuban state. When long-term financing is optimized, it is also optimized in the short term. The optimization of the structure of short-term financing is achieved through the use of financial instruments, such as bills of exchange and promissory notes, which, being negotiable in banks, enable the advance of monetary income in the company.
A similar objective is obtained through factoring (sale of accounts receivable). In the long term, the optimization of financing can be achieved through the capital contributed by third parties, using mortgages on real estate, the issuance of long-term bonds and the leasing instead of the purchase of assets. Likewise, for long-term financing, “preferred shares” can be sold, without the right to vote, at the general shareholders’ meeting. The application of what is stated in this paragraph does not affect the control of the company by the owners of the common shares, with the right to vote, who represent the true owners of the companies that are the property of the state and therefore of the people.
This is a new vision of business financing that would make possible a strong inflow of fresh currency depending on the development of the Cuban economy.