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Finance is the function concerned with finding the capital required to fund the rest of the firm's activities. Roughly speaking, capital comes from two sources, banks (in the form of debt) and shareholders (in the form of equity). In return for their investment banks must be paid interest every year, while shareholders hope to receive dividends and increases in the value of their shares. Finally, the market value of a firm is also influenced by the investment community's level of knowledge and understanding of the firm (also known as investor PR or investor relations).
In order to maximize shareholder value, decisions taken in finance must provide the funds necessary for the firm's other functions at the minimum cost of capital. Essentially this means ensuring that there is sufficient cash (but not a huge unused cash reserve), and that it is funded from a reasonable balance of debt and equity.
A commonly used measure of the risk level of a firm is the firm's debt/equity ratio. As its name suggests, this is found by dividing the value of the firm's debt by the equity value. The idea is that a high ratio of debt will mean that the firm has a relatively high interest bill. In a bad year, the firm can choose not to pay a dividend, but if it defaults on its interest payments the banks may start proceedings to wind the firm up to recover the money. So as the debt/equity ratio increases, shareholders require a higher return and banks increase the interest rate they charge.
Note that an overdraft facility (limited to 25% of the book equity), will automatically be used if there is a cash shortfall. The interest rate charged is 3% more than the interest rate charged on long-term debt.