BUSINESS

FINANCE

Grade 12 Senior High School

Name: ______________________________________ Section: ____________________________

Teacher: ___________________________________ Mobile No: _________________________
Email: ______________________________________ Sem/S.Y.: __________________________
Business Finance

Most Essential Learning Competencies*

Grading Most Essential Learning Learning Resources

Period Competencies

https://youtu.be/qrs3taWpuD8
S1 Introduction to Financial https://share.percipio.com/cd/9XqhXr6-I
Management https://share.percipio.com/cd/9rhLr6wgO
Q1
https://share.percipio.com/cd/IpvpU51ES

S1 Review of Financial
Q1 Statement Preparation,
Analysis, and Interpretation
https://share.percipio.com/cd/_7btDcyn2
https://share.percipio.com/cd/3BTA1KjHb
https://share.percipio.com/cd/9PReKZDIIT
https://share.percipio.com/cd/z-BWEx78H
https://youtu.be/x6dd0IHuC98
https://youtu.be/Byr_FcqS_1o
https://youtu.be/MTq7HuvoGck

Financial Planning Tools and https://share.percipio.com/cd/tq3iw8ylK

S1 Concepts https://share.percipio.com/cd/nrWkxPOcB
Q1 https://share.percipio.com/cd/gwcl0CaN5
https://youtu.be/pd29VYF6e-U
https://youtu.be/IyYZwE67JHU

S1 Sources and uses of short- https://youtu.be/fH_gQmiVZgU

Q1 term and long-term funds https://youtu.be/_vpehy2vuGQ
https://share.percipio.com/cd/sfFq7RhPF

S1 Basic Long-term Financial https://youtu.be/Mcl0vIP-FEU

Q1 Concepts https://youtu.be/3fa3XY4TQk4
https://youtu.be/ks33lMoxst0
https://youtu.be/WFibKSQwyQs
https://youtu.be/M9xD3yyLSAI

*Based on the Department of Education’s Most Essential Learning Competencies

(MELC) Matrix, May 2020

2
 Grading Most Essential Learning Resources
Period Learning
Competencies
Introduction https://youtu.be/-PkN15TtFnc
S1 to Investment https://youtu.be/Qj06rNemNI8
https://youtu.be/R7qaVo7NXKE
Q1
https://youtu.be/M12JhqrFqr4
https://youtu.be/PW2jGN6tW1o
https://share.percipio.com/cd/2yzZI3pz2
https://share.percipio.com/cd/NP_TtCgvM
https://share.percipio.com/cd/fIBTgtlQ6

Managing https://youtu.be/zVcwvCL2C2c
S1 Personal https://youtu.be/vl2sasYSY4E
Q1 Finance https://www.investopedia.com/terms/p/personalfinance.asp
https://www.skillsyouneed.com/rhubarb/personal-financial-
management.html
https://share.percipio.com/cd/zCCVJwarn

*Based on the Department of Education’s Most Essential Learning Competencies

(MELC) Matrix, May 2020

3
 Digital Learning Resource Course Titles

Grading Most Essential Learning Competencies Course Title

Period (www.info.percipio.com)

S1 Q1 Explain the major role of financial Introduction to Financial

management and the different Management
individuals involved

Distinguish a financial institution

from financial instrument and
financial market

Enumerate the varied financial

institutions and their corresponding
services

Compare and contrast the varied

financial Instruments

Explain the flow of funds within an

organization through and from the
enterprise and the role of the
financial manager
S1 Q1 Prepare financial statements Review of Financial
Statement Preparation,
Define the measurement levels, Analysis, and Interpretation
namely, liquidity, solvency, stability,
and profitability

Perform vertical and horizontal

analyses of financial statements of a
single proprietorship

Compute, analyze, and interpret

financial ratios such as current ratio,
working capital, gross profit ratio, net
profit ratio, receivable turnover,
inventory turnover, debt to- equity
ratio, and the like
S1 Q1 Identify the steps in the financial Financial Planning Tools and
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 planning process Concepts

Illustrate the formula and format for

the preparation of budgets and
projected financial statement

Explain tools in managing cash,

receivables, and inventory
S1 Q1 Cite bank and nonbank institutions in Sources and uses of short-
the locality that would serve as term and long-term funds
possible sources of funds for business
operations

Compare and contrast the loan

requirements of the different bank
and nonbank institutions

Draw a flow chart on the steps in loan

application

List down obligations of

entrepreneurs to creditors

Identify uses of funds

S1 Q1 Calculate future value and present Basic Long-term Financial
value of money Concepts

Compute for the effective annual

interest rate

Compute loan amortization using

mathematical concepts and the
present value tables

Apply mathematical concepts and

tools in computing for finance and
investment problems

Explain the risk-return trade-off

S1 Q1 Compare and contrast the different Introduction to investment
types of investments

Classify investment according to its

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 type and features, and advantages
and disadvantages

Measure and list ways to minimize or

reduce investment risks in simple
case problems
S1 Q1 Enumerate money management Managing Personal Finance
philosophies

Illustrate the money management cycle

and gives examples of sound practices in
earning, spending, saving, and investing
money

Lesson 1. Introduction to Financial Management

What you can learn and do in this lesson:

1. Define Finance
2. Describe who are responsible for financial management within an
organization
3. Describe the primary activities of the financial manager
4. Describe how the financial manager helps in achieving the goal of the
organization
5. Describe the role of financial institutions and markets

What is Finance? A term that refers to two main activities; other actual process of
attracting money; and the management of these funds;

The Functions of Finance

• Analysis;
• Decision-making

The Areas of Finance

• Business or Corporate Finance-the firm’s ability to make good finance

decisions.

• Personal Finance-retirement provision, saving plans etc.

• Public Finance-income distribution, stability plans etc.

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Finance Accounting

• Financial Accounting concentrates on record keeping and submitting of

financial statements;

• Finance focuses on making decisions and carrying out analysis based on

information presented by accounting;

• Financial Accounting tends to be more concerned with the past;

• Finance tend to be more interested in present and the future;

• Financial Accounting tends to have an income focus;

• Finance tends to have a cash flow focus;

Business Finance Types of Financial Decisions

Investment Decisions
• Should we build this component or buy it?
• What specific assets should be acquired?
• Should we introduce a new product?
• Which projects should be undertaken?

Financing Decisions
• What is the best structure of financing(debt versus equity)?
• How much of our debt should be short- term as opposite to
long-term?
• What is the best dividend policy?
• How will the funds be physically acquired?

The Goal of the Business

• The target of business is the maximize shareholder’s wealth;
• It’s measured as the price of stocks;
• Wealth maximization concept adjusts for deficiencies of previous
concept;

Comparison of Two Concepts

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Types of Businesses Sole Proprietorships

• A business that owned and operated by one individual;

• The owner and the business are legally identical;

The Pros and Cons of Sole Proprietorships

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Partnerships

• A business that owned and controlled by two or more persons who are
equally liable for losses;

• Typically governed by partnership agreement;

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Company

• Business that owned by shareholders;

• Shareholder liability is limited to nominal value of shares that they own;
• Business is legally separate from it’s owners

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Role of Management

• An agent is an individual authorized by another person, called the

principal, to act in the latter’s behalf;
• Management acts as an agent for the owners (shareholders) of the firm;

Agency Theory

Principals must provide incentives so that management acts in the principals’

best interests and then monitor results;

Incentives include stock options, perquisites, and bonuses;

Financial Markets

 Businesses interact continually with the financial markets;

 Composed of all institutions and procedures for bringing buyers and
sellers of financial instruments together;

The Purpose of Financial Markets

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Types of Financial Markets

• Money Market-market for trading of short-term securities(Repo, CDO,

commercial paper, T-bills);
• Capital Market-where the transaction of long-term securities takes
place(corporate bonds, government bonds);
• Primary Market-newly issued instruments are bid
• Secondary Market-already issued stocks are sold and bought;

Financial Intermediaries

• Come between ultimate borrowers and lenders by transforming

direct claims to indirect claims;
• Commercial banks, insurance funds,mutual funds;

Efficient Allocation of Funds

• Funds will flow to economic units that are willing to provide the greatest
expected return;
• The highest expected returns will be offered only by those economic
units with the most promising investment opportunities;
• Result: Savings tend to be allocated to the most efficient uses;

What Influences Security Expected Returns?

Default Risk-the failure to meet the terms of contract;

Marketability- is the ability to sell a significant volume of securities in a short

period of time in the secondary market without significant price concession;

Maturity- is concerned with the life of the security; the amount of time before the
principal amount of a security becomes due;

Embedded Options- provide the opportunity to change specific attributes of the

security;

Inflation -the greater inflation expectations, then the greater the expected return;

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Activities

Activity#1

(Answer this on Word and type your answer. Submit it online.)

On a sheet of paper, answer the following questions:

A. How much is your daily allowance? If not given daily, how much is your
average allowance per day?

B. Write down all the items you spend money on. List the description and peso
amount spent.

C. Compute for the balance of your allowance by deducting the expenses you
listed from your daily allowance.

D. If the answer to Question C is positive, what do you do with the money left? If
the answer is negative, where do you get additional money?

Activity#2

INSTRUCTION (Answer this on Word and type your answer. Submit it online.)

1. Measurement of the shareholder’s wealth

• Post the question of how do we measure shareholders wealth? Simplify the
example.
- Assume a learner bought 10 shares of Globe Telecom at PHP2,510 each on
September 9, 2010. This brings his investments to PHP25,100. What
happens to the value of his investment if the price goes up to PHP2,600 per
share or it goes down to PHP2,300 per share?

• Conclude that shareholders’ wealth is measured based on the current

market price of the corporation’s stocks. The market price changes across
different periods. Hence, the value of your investment changes in different
points on time based on the market value at that time.

• At this point, start discussing the factors which can affect prices. 2. Factors
that Influence Market Price

• Group the factors into two: Factors that the Management can control and
external factors that cannot be controlled by management.

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Activity#3

Integration of Learning
- Aside from the factors mentioned during class, what other factors can
influence the investor’s perception on the company’s performance which
would ultimately affect share price?
- Why is the study of finance important to you?

Activity#4
• Go to a business in your locality. Ask who oversees the finances of the
business. Interview the “Chief Financial Officer (“CFO”) or the Vice-
President for Finance” and ask them to report about their roles and
functions within the organization.

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