ALDERSGATE COLLEGE Espinoza, Daenielle Audrey M.

Solano, Nueva Vizcaya, Philippines, 3709 Bachelor of Science in Accountancy - 3

School of Business, Management and T71/ AE17/ FINANCIAL MANAGEMENT
Accountancy

1. Compare and contrast the role of financial managers before the 1950s and at
present.
The financial manager plays a key role in optimal utilization of financial
resources of the organization. But finance, as capital, was part of the
economics discipline for a long time. So, financial management until the
beginning of the 20th century was not considered as a separate entity and
was very much a part of economics. However, developments were made
since mid - 1950s up to 1980s, and 1990s up to the present and these are
branded as modern financial management, and post-modern financial
management respectively.
Before the 1950s, financial managers principally raised assets and
dealt with their organizations' money positions. In the 1950s, financial
management turned into an insider looking-in function. That is, the emphasis
shifted to utilisation of funds from raising of funds. So, choice of investment,
and capital investment appraisals assumed importance. Objective criteria for
commitment of funds in individual assets were evolved.
Today, outside variables increasingly affect the financial managers.
Increased corporate rivalry, mechanical change, unpredictability in swelling
and loan fees, overall financial vulnerability, fluctuating trade rates, charge law
changes, ecological issues, and moral worries over certain monetary dealings
must be managed practically every day. As an outcome, money is needed to
play an always crucial key function inside the partnership.

2. Personally define "financial management."

Financial Management is a fundamental part of the overall
management. Finance, in general, is involved in all business decisions. It is
the lifeblood of institutions. Production, marketing, finance, acquisition,
maintenance, investing, employee compensation, resources, capitals, and
personnel decision, almost all decisions for that matter have financial
implications. The amount, type, sources, conditions and cost of finance
squarely influence the functioning of the institution. Therefore, financial
management is pervasive and of great consequence throughout the
organization.

3. Why is investment decision the most important when it comes to value creation?
Investment decision relates to the determination of total amount of
assets to be held in the firm, the composition of these assets and the
business risk complexities of the firm as perceived by the investors. The
investment decision is significant not just for the setting up of new units yet
additionally for the extension of present units, substitution of changeless
resources, innovative work venture expenses, and reallocation of assets, on
the off chance that, speculations made prior, don't get result as foreseen
before. Since funds include cost and are accessible in a restricted amount, its
 ALDERSGATE COLLEGE Espinoza, Daenielle Audrey M.
Solano, Nueva Vizcaya, Philippines, 3709 Bachelor of Science in Accountancy - 3
School of Business, Management and T71/ AE17/ FINANCIAL MANAGEMENT
Accountancy

appropriate usage is extremely important to accomplish the objective of value

creation.

4. In a firm's financing decision, which of the following is the best picture of a

growing and stable firm: a) one with more debt than equity, b) one with more
equity than debt, c) one with no debt? Why?
A big firm that doesn't have debt in its capital structure doesn't have an
optimal capital structure, wherein, optimal capital structure is the best mix of
debt and equity financing that maximizes a company’s market value while
minimizing its cost of capital. Unfortunately, there is no magic ratio of debt to
equity to use as guidance. What defines a healthy blend of debt and equity
varies according to the industries involved, line of business, and a firm's stage
of development. Nonetheless, in light of the fact that financial specialists are in
an ideal situation placing their cash into companies with strong balance
sheets, it makes sense that the optimal balance generally should reflect lower
levels of debt and higher levels of equity. In this manner, a growing and stable
firm with more equity than debt is more preferred.

5. What are financial assets?

A financial asset is a liquid asset that gets its value from an
authoritative right or possession guarantee. Cash, stocks, securities, common
assets, and bank deposits are all are instances of financial asset. In contrast
to land, property, products, or other intangible physical resources, financial
assets don't really have inalienable physical worth or even a physical
structure. Or maybe, their worth reflects variables of supply and demand in
the commercial center in which they exchange, just as the level of risk they
convey.

6. Why are financial markets important?

Financial markets assume a crucial part in encouraging the smooth
activity of industrialist economies by designating assets and making liquidity
for organizations and business visionaries. The business sectors make it
simple for purchasers and dealers to exchange their monetary possessions.
Financial markets make protections items that give a come back to the
individuals who have abundance reserves (Investors/banks) and make these
assets accessible to the individuals who need extra cash (borrowers).

7. Explain how price and time involved to sell an asset affect the asset's
marketability.
Market timing and pricing benefit investments and other long-term
positions by finding the best prices and times to take exposure in order to
book profits. In addition, these timeless concepts can be utilized to protect
active investments by raising red flags when underlying market conditions
change significantly.
 ALDERSGATE COLLEGE Espinoza, Daenielle Audrey M.
Solano, Nueva Vizcaya, Philippines, 3709 Bachelor of Science in Accountancy - 3
School of Business, Management and T71/ AE17/ FINANCIAL MANAGEMENT
Accountancy
8.
Other than the financial intermediaries mentioned, give an example of an institution
in your area that facilitates the flow of funds to and from saving-deficit units.
Presently, I am living at Quezon, Nueva Vizcaya which is a rural area,
wherein financial institutions are not found. Hence, I will be giving financial
institutions which are found at Solano, Nueva Vizcaya. An example of an
institution that facilitates flow of funds to and from saving-deficit units were
Home Development Mutual Fund (HDMF) or also known as Pag-IBIG Fund
and Social Security System. These institutions are government owned and
controlled corporation that provide and obtain funds in the financial markets.