Finance is the Life-blood of Industry in english........

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Finance is the Life-blood of Industry

It is absolutely correct that “finance is the life blood of an industry’ because any business, industry or corporation cannot run without the help of finance. Thus the finance takes part in an industry just like petroleum oil in an engine. In an industry or undertaking finance is required at every stage so, finance is the key of success for the business.

1. Maximisation of Profits : Profit maximisation is desirable objective of an industry. So, every industry wants maximum profit. Profit can be increased by finance because money makes money.

2. Proper Arrangement of Working Capital: By using the finance working capital is arranged properly, working capital can be maintained easily.

3. Helpful in Distribution of Income: Oftenly, income is distributed “in the form of finance. Dividend is paid in cash. Salary is also paid is cash. Thus, it is also helpful in suitable distribution of income.

4. Helpful in Liquidity Checking: It is also helpful in checking of liquid assets. Liquid assets means those assets which can be converted into cash immediately. Liquid assets are very important to maintain the better solvency position of the concern.

5. Helpful in Acquiring Material and Instruments: Finance helps in acquiring the materials and instruments. If genuine finance is available with industry, material and other necessary goods and instruments can be purchased. If material will not be available on requisition, production will have to stay.

6. Helpful in Decision-making regarding Solvency: If finance is available, company can reimburse dividend on shares, interest on debentures and loans. Payment to other creditors can also be made. If there is no finance, payment will not be possible.

7. Preparation of Prospective Extension Plan : Plans are prepared on the basis of availability of finance. Finance is very important for extension of industry. By keeping in view, the financial position of the industry, prospective extension plan should be prepared.

8. Helpful in Preparing the Sales and Credit Policies: Decisions about sales and credit policies are taken on the basis of availability of finance. If any industry has sound financial structure, goods can be sold on credit and an credit policy can be made liberal. However, where financial position is not good, such industry has should be rigid credit policy.

Finance is the life-blood of business. Its need is felt at all levels. It is significant for agriculturists, employees, workers, officers, traders, indusrialists etc. It is base of economic activities. The starting and running business, big or small, needs to mobilise funds. These funds are needed for land and buildings; plant and machinery; wages and salaries; insurance and taxes; and for all kinds of trade expenses.

At last it can be concluded that “finance is the oil of wheel, marrow of bones and spirit of trade, commerce and industry.”