English – Grade 12

Alternative Delivery Mode

Quarter 1 – Module 1: Introduction to Financial Management: Definition and
Concept of Business Finance
First Edition, 2020

Republic Act 8293, section 176 states that: No copyright shall subsist in any work of
the Government of the Philippines. However, prior approval of the government agency or office
wherein the work is created shall be necessary for the exploitation of such work for a profit.
Such agency or office may, among other things, impose as a condition the payment of
royalties.

Borrowed materials (i.e., songs, stories, poems, pictures, photos, brand names,
trademarks, etc.) included in this module are owned by their respective copyright holders.
Every effort has been exerted to locate and seek permission to use these materials from their
respective copyright owners. The publisher and authors do not represent nor claim ownership
over them.

Published by School & Division: San Jose City National High School, San Jose City Division
Schools Division Superintendent: Johanna N. Gervacio
Assistant Schools Division Superintendent: Ronilo Hilario
Curriculum Implementation Division Chief: Veronica B. Paraguison
Supervisor In-Charge: Lordennis T. Leonardo
Principal: Nenita D. Martin

Development Team of the Module

Writers: Deomel I. Caballero
Editors: Name
Reviewers: Name
Illustrator: Name
Layout Artist: Name
Management Team:

Printed in the Philippines by ________________________

Department of Education – Region III – Division of san Jose City

Office Address: ____________________________________________

____________________________________________
Telefax: ____________________________________________
E-mail Address: ____________________________________________

12

Business Finance
Quarter 1 – Module 1:
Introduction to Financial
Management: Definition and
Concept of Business Finance
Introductory Message
For the facilitator:

Welcome to the Business Finance – Grade 12 Alternative Delivery Mode (ADM) Module
on Introduction to Financial Management: Definition and Concept of Business Finance

This module was designed, developed, and revised by educators to support you, the teacher,
or facilitator in aiding the learners meet the standards set by the K to 12 Curriculum while
disabling their personal, social, and economic limitations in schooling.

This module hopes to engross the learners into guided and independent learning activities at
their limited space and time. Additionally, this also targets in helping students gain the needed
21st-century skills while taking into attention to their needs and situations.

Learning Objectives:

1. Define Finance
2. Explain the major role of financial management and the different individuals
involved
Inside the learning resource in the main text, you will also see this box in the body of the
module:

Notes to the Teacher

This serves as a useful tips or strategies
that will help you in facilitating the learning
process.

2
For the learner:
Welcome to the Grade 12 Business Finance Alternative Delivery Mode (ADM) Module
Introduction to Financial Management: Definition and Concept of Business Finance!

The learner s demonstrate an understanding of the definition of finance, the activities

of the financial manager, and financial institutions and markets Hence, the hand in this
learning resource signifies that you as a learner is capable and empowered to
successfully achieve the relevant competencies and skills at your own pace and time.
Your academic success lies in your own hands!
This module was designed to give you enjoyable and important chances to guide you
in your learning at your own pace and time. You will be qualified to process the
contents of the module while being an active student.
This module has the following parts:

What I Need to Know This will give you an idea of the skills or
competencies you are expected to learn in the
module.
What I Know This part includes an activity that aims to
check what you already know about the
lesson to take. If you get all the answers
correct (100%), you may decide to skip this
module.
What’s In This is a brief drill or review to help you link
the current lesson with the previous one.
What’s New In this portion, the new lesson will be
introduced to you in various ways such as a
story, a song, a poem, a problem opener, an
activity, or a situation.
What is It This section provides a brief discussion of the
lesson. This aims to help you discover and
understand new concepts and skills.
What’s More
This comprises activities for independent
practice to solidify your understanding and
skills of the topic. You may check the answers

3
 to the exercises using the Answer Key at the
end of the module.
What I Have Learned This includes questions or blank
sentences/paragraphs to be filled in to
process what you learned from the lesson.
What I Can Do This section provides an activity that will help
you transfer your new knowledge or skill in
real-life situations or concerns.
Assessment This is a task which aims to evaluate your
level of mastery in achieving the learning
competency.
Additional Activities In this portion, another activity will be given to
you to enrich your knowledge or skill of the
lesson learned. This also tends to the
retention of learned concepts.
Answer Key This contains answers to all activities in the
module.

At the end of this module you will also find:

References This is a list of all sources used in developing

this module.

The following are some reminders in using this module:

1. Use the module with care. Do not put unnecessary mark/s on any part of the
module. Use a separate sheet of paper in answering the exercises.
2. Don’t forget to answer What I Know before moving on to the other activities
included in the module.
3. Read the instruction carefully before doing each task.
4. Observe honesty and integrity in doing the tasks and checking your answers.
5. Finish the task at hand before proceeding to the next.
6. Return this module to your teacher/facilitator once you are through with it.
If you encounter any difficulty in answering the tasks in this module, do not hesitate
to consult your teacher or facilitator. Always bear in mind that you are not alone.
We hope that through this material, you will experience meaningful learning and
gain a deep understanding of the relevant competencies. You can do it

4
 What I Need to Know
This module was designed and written with you in mind. It is here to help you master
the definition of finance and the concept of finance. The scope of this module permits
it to be used in many different learning situations. The language used recognizes the
diverse vocabulary level of students. The lessons are arranged to follow the standard
sequence of the course. But the order in which you read them can be changed to
correspond with the textbook you are now using.

The module is divided into lessons, namely:

• Lesson 1 – Definition and concept of finance
• Lesson 2- Function of Finance Officer

After going through this module, you are expected to:

1. Define Finance
2. Explain the major role of financial management and the different individuals
involved.

What I Know

Write TRUE if the statement is correct, write FALSE if the statement is incorrect
before each number.

___________1. Finance connotes money.

____________2. The term finance has a standard definition that is universally

recognized and accepted.

____________3. Finance is static.

____________4. Finance is considered a science since it involves financial

facts and truths.

____________5. Finance introduces the fields of accounting and economics.

5
 Lesson
Definition and concept of
1 finance

Finance usually related to money, this is partly true since the finance manager
or finance officer is often considered as a fund custodian.
The American Heritage Desk Dictionary defines finance as the management
of money, banking, investments, and credits.
Finance is both a science and art of correct application of the economic and
accounting concepts and principles that define the system, structure, and process of
management, allocation, and utilization of financial resources, investment, and
expenditures.
Finance, as a field of specialization, deals with and is strictly governed by
financial facts and truths. People practicing finance including financial managers do
not work on a business environment with whimsical figures and information, Factual
information, which is the product of scientific business processes, supports and
provides the basis for making financial decisions

What’s In
To introduce the new lesson let us have an activity:
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.

6
 Notes to the Teacher

Begin by presenting a scenario in everyday life

(Try: the life of a high school student). • Narrate the
scenario in your own style or as prescribed below: - Ask
the learners how much allowance they are given to and
how often do they receive it (daily, weekly, etc.) -
Continue discussing the activities done in a day from
getting to school, to attending flag ceremony, classroom
discussions, lunch breaks, end of classes, occasional
meriendas or going out with friends and playing
computer games, going back home and going back out
to a nearby store to buy autoload because they realized
that they can’t end the day without texting their crush. -
Ask learners how many have savings out of the allowance
they get from their parents. - End the story by identifying
the expenses they incurred (i.e. tricycle fare, lunch,
merienda, computer games) and letting them recognize
the value of savings and possibly investing at a young
age. - Reveal that most of the activities they do involving
decisions on where to use their allowance is a finance
decision.

7
 What’s New
FINANCE OFFICER- plays a crucial role in the whole business organization. He or
She acts as the wary financial traffic officer to all business transactions with
monetary considerations.
The Corporate organization Structure • Illustrate the corporate organization
structure and inform them that this particular set of people each play a role in the
decision making of the company.

SHAREHOLDERS

BOARD OF DIRECTORS

PRESIDENT (CEO)

VP MARKETING VP FINANCE VP PRODUCTION VP

ADMINISTRATION

Figure 1: Illustration of the Corporate Organization Structure

From the diagram presented, emphasize that each line is working for the
interest of the person on the line above them. Since the managers of the company
are making decisions for the interest.

Teacher Tips: The various types of functions are expected if the person they
interviewed is a small business owner who makes decisions on various aspects of
the business. The board of directors and the board of directors does the same for the
interest of the shareholders, it follows that the goal of each individual in a corporate
organization should have an objective of shareholders’ wealth maximization.

8
Functions of a Financial Manager

FINANCING Include making decisions on how to fund long term

investments (such as company expansions) and working
capital which deals with the day to day operations of the
company (i.e., purchase of inventory, payment of operating
expenses, etc.).
INVESTING Deal with choosing small and large projects with several
investment opportunities. The investment decisions are made
only when investments opportunity comes. In making an
investment decision, large money is usually involved, it
includes placing extra money or funds to stocks and bonds.
OPERATING Deal with the daily operations of the company. The role of the
VP for finance is determining how to finance working capital
accounts such as accounts receivable and inventories. The
company has a choice on whether to finance working capital
needs by long term or short term sources. Why does a
Financial Manager need to choose which source of financing
a company should use? What do they need to consider in
making this decision?
DIVIDEND Recall that cash dividends are paid by corporations to existing
POLICIES shareholders based on their shareholdings in the company as
a return on their investment. Some investors buy stocks
because of the dividends they expect to receive from the
company. Non-declaration of dividends may disappoint these
investors. Hence, it is the role of a financial manager to
determine when the company should declare cash dividends.

Ask the learners the following: - Explain why shareholder wealth maximization
should be the overriding objective of management. - What other positions can you
think of that are related to financial management?
Answer: Treasurer, Controller. These are positions under the CFO)

9
 What is It
In this activity, you will identify cohesive devices. Are you ready to spot them in this
puzzle?

Cohesive Puzzle
Encircle the technical words in the concept of business finance
below in the puzzle.

finance funds decision policies

investment planning operation analysis

controller capital dividend profit

forecast treasurer budget

A B E S I D E S I N C D D I T I O N S I

F I N A N C E I U P O L I C I E S L Y N

T F S I N Y F A L A N A L Y S I S N F V

T R E A S U R E R F T W H S N E E I I E

D I V I D E N D T R R H E A T E R A R S

O P E R A T I O N E O I R E R D I T S T

D E C I S I O N O V L L E E O E E R I M

H Y T L E E R A T O L E U E L D F R G E

F M I I D A O L S E E U H G L R S S B N

U U D K E S I L I R R T V H E T A U E T

N F O R E C A S T O P L A N N I N G K S

D N L I K E E B I M C A P I T A L X B N

S B U D G E T N M O P R O F I T T R E C

What’s More

10
This time you will test your skills in using technical terms in functions of a finance
officer (FO) in completing an informative text.

Directions: Fill in the blanks with appropriate words from the lists given at the end of
each passage.

A. The (1) _____________ decisions made by a (2)__________ officer are,

therefore, routine in character. Through the operating decisions do not entail very
critical (3)__________ of the economic and (4)__________environment, the finance
officer shall still exercise due prudence and wise (5) __________ in making such
decision

[ finance, operating, , judgement, analysis ,business]

B. (1) _________ decisions, deal with choosing small and large projects with several
investments (2) _____________. The different (3) ___________ are critically
evaluated in terms of return of investments and expected (4) ___________flows.
However investment (5)__________ are made only when investments opportunity
comes.

[Investment, opportunities, projects, cash, decisions]

What I Have Learned

11
 Also, Definition and Concept of Finance can be easily understood
through these different concepts:
Both a science and an art
Finance is also considered an art. The different financial services continue to
change and develop as the operations of the business organization become more
complicated. The financial practices do not remain static but become adaptive to the
changes in the business environment over time.
Finance, as a field of specialization, deals with and is strictly governed by
financial facts and truths. People practicing finance including financial managers do
not work in a business environment with whimsical figures and information. Factual
information, which is the product of scientific business processes, supports and
provides the basis for making a financial decision.
Application of economic and accounting concepts and principles
Economics, like social science, is concerned with the efficient utilization of
scarce resources to satisfy human needs and wants. Economic variables such as
price, demand, supply, income, and expenditures are the focus of study in the
development of economic theories and principles.
Accounting is an art of recording business transactions and deals with the
preparation of financial statements. Accounting is considered as the language of both
business and finance.
System, structure, and process
The field of finance provides and clearly defines a systematic, structured, and
procedural mechanism on the various financial activities affecting the business. A
single financial activity of a business, therefore, is not simply happening by itself, but
rather follows the defined system, structure, and process adopted by the business
organization.
The term System connotes that the financial activities of the business are
properly coordinated with the whole structure. A clear financial procedure directs all
the human resources of the business towards the attainment of the ultimate objective.
Management, allocation, and utilization
The fundamental concern of finance is to ensure that the limited financial
resources are correctly managed, allocated, and utilized to achieve the financial goal
of a business.
Allocation connotes the wise distribution of financial resources to the different
functional areas, the proper assignment of funds between current and non- current
assets, and the correct sourcing of funds based on the concepts of risk and return.

12
Financial resources, investment, and expenditures

Financial Resources refer to the funds of a business that are provided by the
owner or by the creditors. Financial Investments are resources that are expected to
provide income and achieve appreciation or growth of the business. Financial
Expenditure of a business may cover the operating expenditures and capital
expenditures.
The finance officer plays a crucial role in the whole business organization. He
or she acts as the wary financial traffic officer to almost all business transactions with
monetary considerations. The finance officer is also expected to be the “ shock
absorber” of budgetary requests and requirements of other functional units of the
business.

What I Can Do

Good job!
Now I have a question
Kindly explain the reason why a finance officer should
have good communication skills?

Your answer should be based on the function of a finance

officer (FO)

Assessment
Multiple Choice. Choose the letter of the best answer. Write the chosen letter on a
separate sheet of paper.

13
1. What is the function of finance officers that are focused mainly on buying selling
and operating expenses?
a. Financing
b. Investing
c. Operating
d. Dividend Policies

2. What is the role of the VP for Finance of the Financial Manager is to determine
the appropriate capital structure of the company. Capital structure refers to how
much of your total assets are financed by debt and how much is financed by
equity growth?
a. Financing
b. Investing
c. Operating
d. Dividend Policies
3. What is the function of a finance officer that he or she must be equipped with
the necessary technical skills and expertise in making evaluating placing funds
in any business activities?
a. Financing
b. Investing
c. Operating
d. Dividend Policies

4. Financial decisions affecting the routine operating activities of a business. It is

directed towards providing immediate solutions to the concerns of the functional
areas of the firm such as manufacturing, marketing, and purchasing. What
functions of the finance officer are being described in the above statement?

a. Financing
b. Investing
c. Operating
d. Dividend Policies

5. The primary goal of the financial manager is _____.

a. minimizing risk
b. maximizing profit
c. maximizing wealth
d. minimizing return

6. The accountant can likewise perform the functions of the treasurer in a business
organization. The above statement is?
a. True
b. False
c. Partly true

14
 d. Partly False
7. Financial investment as an area of finance is directed towards the evaluation
and study of financial institutions and their functions in a financial community.
a. True
b. False
c. Partly true
d. Partly False
8. Financing is to determine the appropriate capital structure of the company and
to raise funds from debt and equity.
a. True
b. False
c. Partly true
d. Partly False
9. Operating cannot determine how to finance working capital accounts such as
accounts receivable and inventories (short term vs. long term)
a. True
b. False
c. Partly true
d. Partly False
10. The choice between short and long term sources depends on the risk and return
trade-off that management is willing to take.

a. True
b. False
c. Partly true
d. Partly False

15
 Additional Activities

Write TRUE if the statement is correct. If it is not written FALSE.

________1. Finance is a science but not an art

________2. Public finance checks whether public funds are properly spent
________3. Finance is one functional area of a typical business organization
________4. The operating decision of the finance officer is related to day to day
activities of business.
________5. It is enough for the finance officer to know to account
________6. A company that has access to long term sources of funds may be able
to declare dividends even if they are faced with investment opportunities. However,
these investment opportunities are generally financed by both debt and equity.
________7. The management usually appropriates the total of retained earnings for
investment undertakings and this may limit the amount of retained earnings available
for dividend declaration.
_______8. Financing decisions usually affect creditors and business owners.
_______9. The making of an operating decision is more delicate and critical than
that of investment decision
_______10. The decision of the finance officer regarding the opening of a branch is
a financing decision.

16
 17
What I Know Assessment Additional
1. TRUE 1. C Activities
2. FALSE 2. A
1. FALSE
3. FALSE 3. B
2. TRUE
4. TRUE 4. C
3. TRUE
5. TRUE 5. C
4. TRUE
6. A
5. FALSE
7. A
6. TRUE
8. A
7. FALSE
9. B
8. TRUE
10.A
9. FALSE
10.FALSE
Answer Key
References

Business finance in the Philippine Settings for senior High School, Nick L Aduana

Teaching Guide for Senior High School BUSINESS FINANCE Published by the Commission on Higher
Education, 2016
 Chairperson: Patricia B. Licuanan, Ph.D. ARTHUR S. CAYANAN, Ph.D. Team Leader

18
19
For inquiries or feedback, please write or call:

Department of Education – Division of San Jose City

San Jose City National High School –Senior high school

Josephine College, Brgy. Calaocan,San Jose City, Nueva Ecija

Telefax:

Email Address: deomel.caballero@deped.gov.ph