What is the time value of money in finance?

The Time Value of Money (TVM) is a financial concept stating that money available today is worth more than the same amount in the future due to its potential earning capacity. This principle is based on the idea that money can earn interest or generate returns if invested. For example, ₹1,000 today is more valuable than ₹1,000 one year later because it could be invested to earn more. TVM is used in various financial decisions like loan calculations, investment analysis, and retirement planning. It emphasizes that timing matters in finance, and receiving money sooner is always financially preferable.