Integration of Faith
Tiffany Smith
Business 530- Managerial Finance
Dr. Hicks
Liberty University
February 3, 2013
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Introduction
Money is integral to an economy. It creates a fair system of trade, helps measure the
value of products and services, and encourages people to work hard. The Bible does warn about
greed, “He that loveth silver shall not be satisfied with silver; nor he that loveth abundance with
increase: this is also vanity” (Ecclesiastes 5:10, King James Version). Having a goal of running a
successful business is not against the Bible’s teachings. In fact, “there is little conflict between
doing well (maximizing value) and doing good” (Brealey, Myers, & Marcus, 2012, p. 14). The
Bible can be applied to any and all aspects of business and finances.
Corporate Finance
The Bible, of course, is full of examples, instances, and stories about business. Hagerman
(1982) states: An important element in business planning is the budgeting process, and this
subject is not neglected. Luke 14:28-29 says, ‘Which of you here intending to build a tower
would not first sit down and work out the cost to see if you had enough to complete it?’ This
quotation refers not only to project budgeting but also to cash flow forecasts. The need for such
budgeting is as true today as it was in St. Luke’s time (p. 50). A few of the first topics covered in
the course are business organizations and leadership, financial institutions, accounting statements
and cash flows, formulas to help measure the value and efficiency of a company, and the
importance of business ethics (Brealey et al., 2012).
Ethics plays a huge role in business as it keeps businesses and employees honest,
promotes accuracy, and protects those who could otherwise be hurt by someone else’s scheming.
In order to protect ethics, sometimes transparency is needed to help those tempted to commit
fraudulent acts. The Bible states, “Better is the poor that walketh in his integrity, than he that is
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perverse in his lips, and is a fool” (Proverbs 19:1). The transparency of a company is when
“outsiders can assess its value and performance” (Brealey et al., 2012, p. 103).
Value
Some of the most useful financial concepts can be gathered by understanding time value
of money. By mastering the basic concepts and formulas comprising time value, one can
implement them into their daily lives, as well as in their financial organization in which they are
employed. The time value of money reflects how much a dollar today will be in the future, also
known as future value (FV). According to the Journal of Business Strategy, the three most
important growth concepts comprising value in a business are managing current operations,
managing assets and deciding where to invest resources (Ballow, Burgman & Molnar, 2004).
An individual or organization will have the large growth rate on investments such as human
capital, machinery, technology and more. When putting money aside, or investing money into
something that will be rewarding in the future, one can generally count on a favorable outcome,
as well as directly correlate their decisions to Scripture. The time value of money, similarly to
the investment in the Lord that Christians make, indicates the simple fact that, by investing now,
it will pay off in the future. As it states in Corinthians 9:8, " The point is this: whoever sows
sparingly will also reap sparingly, and whoever sows bountifully will also reap bountifully"
(Holy Bible, 2011). By recognizing this, one can spare themselves of worldly possessions. They
must also currently invest more time in being a leader for Christ so they may wait patiently for
their divine reward. This type of lifestyle will be the gateway into heaven. As stated in Psalm
37:34," Wait for the Lord and keep his way, and he will exalt you to inherit the land; you will
look on when the wicked are cut off" (Holy Bible, 2011). It is essential to be a leader for Christ
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on a personal level as well as in the business world. By following the words of the Lord and
sacrificing worldly possessions today, the reward will be tremendously in the future.
Financing
Matthew 17:20 states, “He replied, because you have so little faith. I tell you the truth, if
you have faith as small as a mustard seed, you can say to this mountain, 'Move from here to
there' and it will move. Nothing will be impossible for you" (Holy Bible NIV). This scripture
relates more to the world of business than some may realize. In order for a new business to be
successful one of the most important things it needs is faith. The second thing it needs is the
money to get this dream off the ground. Venture capital is “money invested to finance a new
firm” ((Brealey et al., 2012, p. 423). This could come from one person or a team of people.
These investors could also be active in the business or passive, also known as angel investors. In
order to take the business to the next level and gain even more money the company needs to go
from being privately held, with only a few investors, to publicly held where the shares are
available to the public for sale.
Some years ago, two college dropouts had a dream of starting their own company. They
sold all of their possessions and from a garage began to build computers. The two men were
Steve Jobs and Steve Wozniak and the company was Apple. In 1980, when they went public
their share jumped from $22 to $36 and made the two founders worth $414 million. Today
Apple’s stock market value is worth more than $500 billion (Goldman, 2012). This is the perfect
example of how a small amount of faith in addition to hard work can do what many may view as
being impossible.
Debt and Payout Policy
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Due to the amount of money it normally takes in order to operate a business in today’s
economy, many companies decide that they need to raise money. In order to raise this money
they may take out loans or issue stock. “Capital structure is the mix of long-term debt and equity
financing” (Brealey, Myers & Marcus, 2012p. 446,). Companies must be very careful how they
decide to raise this money. Proverbs 22:7 states, “The rich rules over the poor, and the borrower
is servant to the lender” (NKJV). This is true not only in a person’s personal life but in
businesses as well. How a company decides to raise the funds it requires to operate can have a
huge impact on how it is able to conduct business or what forces can have an impact on the
business operations. Dave Ramsey explains, “Debt brings on enough risk to offset any
advantage that could be gained through leverage of debt” (Ramsey, 2007, p. 21).
Although many companies will still require other outside sources in order to begin
operations, they do have the option of stock repurchase. This is when “a firm buys back stock
from its shareholders” (Brealey, Myers & Marcus, 2012, p. 482,). This begins the process of
limiting the amount of outside influences that are present on the company’s policies and
procedures. I Timothy 6:10 states, “For the love of money is a root of all kinds of evil, for which
some have strayed from the faith in their greediness, and pierced themselves through with many
sorrows” (NKJV). It can be this love of money that leads investors to strong-arm a company into
doing something that is against its principles.
Conclusion
The Bible is an integral tool for everyday life. It provides the reader with insight,
inspiration, knowledge, and teachings from the writers’ experiences and observation. The Bible
instructs the reader to be God-fearing, smart, diligent, and honest. For example, in Matthew
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25:14-30, Jesus speaks about a man who gave three men a different amount of money based on
their skills. The three men went out and did their business. When they came back, the first two
had doubled the amount given to them and were rewarded by the master. The third one did
nothing with his amount and just gave it back to the master who was angry with him for not at
least depositing in a bank where it could accumulate interest. Money is not the most important
thing in the world according to the teachings of the Bible. It is, however, important for society to
function fairly and freely.
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References
Brealey, R. A., Myers, S. C., & Marcus, A. J. (2012). Fundamentals of corporate finance. New
York: McGraw-Hill/Irwin.
Goldman, D. (2012, March 05). At $500 billion, apple is worth more than poland. Retrieved
from http://money.cnn.com/2012/02/29/technology/apple_market_cap/index.htm
Hagerman, R. L. (1982, June). Accounting in the bible. Journal of Accountancy, 153(6), 48-52.
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Holy Bible, King James Version ®, KJV®. (n.d.). Retrieved from http://www.biblegateway.com
Holy Bible. (2011). New international version. Grand Rapids, Michigan.
Ballow, J., Burgman, R., Molnar, M. (2004) "Managing for shareholder value: intangibles, future
value and investment decisions", Journal of Business Strategy, Vol. 25 Iss: 3, pp.26 -
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http://www.emeraldinsight.com.ezproxy.liberty.edu:2048/journals.htm?articleid=874343
&show=abstract
Ramsey, D. (2007). The total money makeover. Nashville, TN: Thomas Nelson.
