Finance is a field that dominates various aspects of society and plays a crucial role in the business process. The term finance is very broad and covers a vast amount of activities that support the business process every day. Generally speaking, Finance can be defined as activities that revolve around the management of money and acquiring funds, such as investing, lending, and borrowing. The college of business at the Pennsylvania State University defines finance as “how individuals and business organizations raise money and capital, and how those resources are allocated among competing investment and consumption opportunities” (“Finance,” n.d.). There are two types of finance that drive and support the business process in different ways: personal and corporate.
Personal finance is concerned with the individual and how they manage their money. This category of finance “is the process of planning and managing personal financial activities such as income generation, spending, saving, investing, and protection” (“What is Personal,” n.d.). Clearly, this form of finance is purely focused on the end consumer and how they utilize their money. This field helps people diversify their wealth and allows them to spend money wisely. Personal finance supports the business process through guiding people where to invest their money in the stock market, helping people budget their money, and creating financially secure futures for clients. Ultimately, it supports the business process by enabling the end user to have enough money and resources to buy products and services from businesses. Furthermore, consumers are investing in the economy and are funding businesses through personal financial services. Essentially, personal finance ensures that consumers are actively engaged in the business process within society.
Corporate finance is the category of finance that dominates the world and essentially drives the business process itself. Simply put, businesses and the business process are not possible without corporate finance. Corporate finance can be viewed as the foundation of the business process and focuses on “the capital structure of a corporation including its funding and the actions management take to increase the value of the company” (What is Corporate,” n.d.). This field of finance is comprised of capital financing, structuring, budgeting, and investing. The collective goal of these activities is to maximize the value of a company while reducing risk and to implement a plan to remain profitable.
In short, corporate finance is how businesses effectively receive funding and utilize their capital assets to increase the worth of their business. For example, large corporations acquire funding through selling stocks or debt securities and use this money to invest in the corporation. Finance professionals then use financial modeling and various analysis techniques to allocate the company’s capital assets. They identify future expenditures, estimate the cash flows, and determine which projects to proceed with. This is known as capital budgeting and it is the primary aspect of corporate finance. Furthermore, corporate finance includes the role of balancing equity and debts in order to optimize the capital structure of a company. Clearly, corporate finance supports the business process in an abundance of ways. It enables businesses to have enough funding through borrowing from banks and helps them wisely use their assets to remain profitable. This field helps businesses run feasibly through precise budgeting and the structuring of a company’s capital assets. Arguably, everything that happens within a business is possible due to the financial strategies that are implemented by a company.
Evolution of field:
In order to understand finance in its entirety, is vital for one to understand the evolution of the field over the last 20 years. In the ….
Five Major Financial Companies (Divided amongst group members):
S&P Global provides financial information and analytics of various companies and commodities to consumers across the world. They provide specific date, price assessments, and market insights with propriety analysis. The company claims that they “provide intelligence that is essential for companies, governments, and individuals to make decisions with conviction”. S&P Global started as a publication which kept citizens up to date with the latest railway industry news and commentaries in 1888. In the forthcoming years, the company formerly known as McGraw-Hill grew and acquired other publications and financial information services such as American Machinist, Standard & Poors, Capital IQ, CRISIL, and SNL Financial. McGraw-Hill Financial launched a joint venture in 2012 to create the S&P Dow Jones Indices. One of the most essential indices in the marketplace was created, delivering data relied on by millions of investors around the globe. In 2016 McGraw-Hill Financial changed their company title to S&P Global. To this day, over four million companies are covered by their research and data, with over one million credit ratings on entities and securities across a wide range of sectors. On average over 10,000 daily energy and commodity price assessments are produced, and they cover 99% of the global market. S&P Global have proved themselves to be one of the top financial analysis companies by consistently providing sound strategic insights to consumers, and dominating the market at that.
Capital One Financial Corporation is a bank holding company specializing in diverse financial products and services, with its headquarters in McLean, Virginia. It was founded by Richard Fairbank and Nigel Morris in 1994 and has become one of the largest banks in the United States. Its key executives include Mr. Richard D. Fairbank (Founder, Chairman, Chief Executive Officer, and President), Mr. Richard Scott Blackley (Chief Financial Officer), Mr. Sanjiv Yajnik (President of Financial Services), and Mr. Frank G. LaPrade III, J.D. (Chief Enterprise Services Officer and Chief of Staff to the Chief Executive Officer). Its major competitors include American Express, JP Morgan Chase, Bank of America, and Citigroup. Its total revenue reached to $28,076,000,000 at the end of the year of 2018. Capital One Financial Corporation has three operating segments: Credit Card, Consumer Banking, and Commercial Banking. The company provides clients with credit and debit card products and online banking services through online and mobile banking devices, ATMs, and branches across the country. It also includes various types of credit and debit cards to meet the needs of consumers, small businesses, commercial clients and other communities. For Consumer Banking and Commercial Banking segments, the company offers banking services, auto loans, commercial and industrial loans, and commercial real estate loans.
The Bank of New York Mellon is a financial institution that has remained dominant for the past 230 years. The global investment company has been operating under its current name since the merger between the Bank of New York and Mellon Financial Corporation in 2007.
Five Financial Positions (Divided amongst group members):
Security and commodity traders, also known as brokers, buy and sell securities and commodities to transfer debt, capital, or risk. They establish and negotiate unit prices and terms of sale. The median wage that brokers make is $64,120 annually. It is a satisfying job for people who are interested in having a level of independence to work on their own and make decisions, and it offers security and good working conditions. The various tasks of brokers involve monitoring markets or positions, making bids or offers to buy and sell securities, and buying and selling stocks, bonds, commodity futures, and foreign currencies. The skills required for the job are listed as critical thinking, active listening, speaking, judgment, and decision making. Employees should be able to use inductive and deductive reasoning, which is the ability to use a set of rules or to combine several pieces of information to solve problems. The job wouldn’t necessarily be recommended to someone who prefers to be up and moving, as employees reported that a majority of their time on the job was spent sitting continually, connecting to people through electronic mail, telephone, and face-to-face discussions. Although not for everybody, brokers make a good living while performing duties that keep satisfaction levels high and provide a feeling of accomplishment.
More and more people within the finance field are considering becoming financial analysts because of its high earning potential and other career opportunities that this career path could lead to. However, the financial services industry is very competitive and has challenging barrier to entry. Financial analysts are people who examine financial data and market trends and come up with reports that would help companies make investment decisions or predict future outcomes. Based on their findings, analysts would also provide companies with their recommendations on course of actions. Preferably, financial analysts are individuals who obtain degrees in economics, finance, accounting or statistics, individuals who have a strong quantitative mind and a desire to solve problems, or individuals who are comfortable with analyzing data and coming up with solutions based on the analysis. One of the major responsibilities of being a financial analyst is to predict future outcomes of a business decision by analyzing past transactions and composing financial models. Being an analyst could be challenging because of its data-driven nature. One might need to overcome the stress and difficulties when facing complex data and ambiguous variables. There are three major types of analyst positions. Individuals could choose to work for buy-side firms, sell-side firms, and investment banks. Financial analysts who work for buy-side firms help their employers make investment decisions, and those who work for sell-side firms interpret qualities of securities in an industry. Analysts in investment banks examine corporate fundamentals and determine whether a business deal is feasible or not. For an entry-level financial analyst, the median annual income is $55,265. Senior analysts’ annual salaries could go up to $150,000.
Chief Financial Officer (CFO) is a position that can be viewed as the epitome of success within the financial field. This senior executive position comes with the task of overseeing the entirety of a corporation’s financial performance. They are entirely in charge of the accounting and financial departments within a company. In particular, they are in charge of the financial reporting, liquidity, and financial planning of a company. Chief Financial officers oversee the reporting of a company’s finances and must ensure that these financial reports are accurate for shareholders and legal purposes. It is essential for CFO’s to be on top of reports due to the implications and legal consequences a company can encounter from faulty or false reporting. In addition, Chief Financial Officers have tremendous input in the decisions that surround investments and how the company spends its money. Through assembling teams of top managers and colleagues, CFOs decide how to balance cash flows and debts, and where to allocate capital within a company. They ultimately create the financial plan of a company and shape the capital structure of it as well. CFOs forecast and analyze future expenditures to ensure long-run success of a firm. Essentially, they dictate where and how the money of a company is going to be spent while making sure the company is sufficiently funded (“What Does,” n.d.). In order to become a Chief Financial Officer, one must have a bachelor's degree, great leadership skills, and at least 5-15 years of experience within the field of finance. In addition, CFO’s tend to have various accounting skills and certifications such as a CPA license. It is perhaps the most desirable role within finance and those who aspire to become one must have foresight and polished analytical abilities. Perhaps this position is so desirable due to the various responsibilities, the median annual salary of $173,320, and the pride of driving a company to financial success (“How to Become,” n.d.).
Job Search (Wen Bo):
Handshake provides Stony Brook undergraduates with copious job opportunities. I found a job without much barrier to entry when I typed “finance” as the keyword in job search. According to its job posting on Handshake, it is a paid full-time job located in New York City, provided by Academic Leadership Charter School. The job title is “Finance Associate”, and the applications will be closed by April 16th, 2021. A handshake says that my profile matches with all of the company’s preferences. Taking my profile as an example, I am currently a senior with double majors in Business Management (specialization in finance) and Economics. I have a 3.67 GPA and am eligible of working in the United States. The company is looking for individuals who have developed an understanding for finance operations and know-how to solve problems using data analysis skills. In addition, this job requires verbal and written communication skills, experience using Excel, Quickbooks, and other financial data software, and multi-task skills. Responsibilities include managing school purchasing process, recording transactions, maintaining inventories, and providing the school with financial data reports. The company provides employees with medical benefits and 401K with a five percent match. This is an entry-level job within the field of finance. It does not require too much data analysis and in-depth financial analysis skills. Candidates with some financial academic background or individuals who know how to analyze data and composing financial reports would be good fits for this position. There are two application steps. If an individual is interested in applying, one could simply click the “apply” button on the bottom of the job listing page and upload one’s cover letter and resume. The company would send out notification emails once applications have been received. It is unclear whether or not the company would interview candidates, but I recommend individuals who are interested in this position to research for more information about the company and prepare themselves for an interview.