CATEGORIES OF FINANCE

Classify the following:

1. Private Finance – PB
2. Private Finance – PF
3. Public Finance – P
4. Public Finance - P
5. Private Finance – PN
6. Private Finance – PN
7. Public Finance – P
8. Private Finance – PN
9. Private Finance – PF
10. Public Finance – P

GOALS OF BUSINESS FINANCE

1. A
2. A
3. C
4. C
5. A
6. D
7. A
8. B
9. C
10. C

What are the advantages and disadvantages of having financially capable business and yourselves?

Advantages

 You will know exactly how much money is available to run your business and you will not have
to spend time trying to secure other forms of funding.
 Self-financing your business gives you much more control than other financing options.
 You will retain full ownership of the business.
 If you fund a business yourself, you will be forced to live within your means.

Disadvantages

 Will put a strain to you and your family

 In case of failure, you may lose your home and personal possessions.
 You will have to develop your own contacts and mentoring opportunities as such may come
from investors and venture capitalists.
FINANCIAL SYSTEM (MONEY)

1. Cowrie shells were used before as a form of money but they are effective since some would not
trade their goods with shells since shells are abundant to their countries. Shells can’t be easily
regulated because of its overabundance.
2. The similarities are that they were used as a money as a standard of value and medium of
exchange.
3. Not effective since no one would accept them since they don’t have any value same as before.
4. It serves as standard medium of exchange and act as a liquid asset to run your business.
5. It means that businesses, services and goods are working with the use of money. All business,
services and goods in the world runs with the use of money like our blood within our body.

FINANCIAL INSTRUMENT

1. C
2. D
3. C
4. D
5. D
6. B
7. C
8. D
9. D
10. C
11. C
12. C
13. A
14. C
15. C

FINANCIAL MARKETS

1. Why is knowledge of financial markets an important requirement in business finance?

Knowledge on financial markets helps in business success and improve business profits.
2. In your own understanding how will describe financial market. It helps in the efficient direct flow
of savings and investments in the economy which facilitates the accumulation of capital and
contribution in the production of goods and services.
3. It helps in providing money you can borrow or you can deposit money or invest them.
4. Borrowing to invest gives you access to more money to invest. This can help increase your
returns or allow you to buy bigger investments, such as property.
5. They use the funds to generate enough profits to more than cover the cost of borrowing. Taking
out credit, whether it's a business loan, invoice finance or an overdraft, allows them to invest in
more sales, creating more profit.
FINANCIAL INSTITUTIONS

1. It is bold and risky decision but definitely a good investment move.

2. Both the consumers and lenders as it will generate more profit on businesses and services to
customers.
3. Financial institutions such as banks since they will be a competitor to them despite the
Robinsons is not a bank.
4. Yes, deposit money and borrow money for personal finances.
5. I would definitely save it to a bank because it is a sure way to increase its value with less risks.

FINANCIAL STATEMENTS

1. The financial statement shows positive results as the business produced a profit.
2. Sell ice candy at my neighborhood
3. Sales (8php x 100pcs) 800
Less Cost of Goods (6x100) 600
Gross Profit 200
Less operating expenses (1person) 50
Logistics 10
Net Profit 140

BREAK-EVEN

1. Sales of puto (20php/pc x 95pcs) 1,900

Discounted puto(5pcs x 10php/pc) 50

Cost of puto (10php/pc x 100) 1000

Gross Profit 950

Less operating expenses

Labor cost (2 person) 700

Logistics (delivery) 200

Net Profit 50.00

2. Sold the unsold puto at a lower price to avoid losses due to spoilage.
BALANCE SHEET

1. The balance sheet shows that Ana’s total asset is balanced with his total liabilities and equity.
2. Asset 1,600
Liabilities
Accounts payable (ingredients) 600
Accounts payable (manpower) 50
Accounts payable (logistics) 10

Capital 800
Sales 140

STATEMENT CHANGES IN OWNER’S EQUITY

1. Ana’s total equity as of December 31, 2019 amounts to 7,200 pesos.

2. Owners’ equity

Capital 800

Earnings 140

Owner’s equity as of Dec 31,2019 940

TRUE OR FALSE

1. True
2. True
3. True
4. True
5. True
6. True
7. True
8. True
9. True
10. False
MODIFIED MATCHING TYPE

ASSET LIABILITIES EQUITY

Property & equipment Lon-term payables Owner’s capital

Accounts receivable Note payable

Notes receivable Accounts payable

Cash Unearned income

Prepaid expenses Accrued expenses

Inventory

COMPARATIVE INCOME STATEMENT

1. The Income statement from December 2021 is much higher or better than December 2022.
2. Sales are less with 8.37%, Cost of goods increased by 6.67% & Operating expenses increased by
20%.

VERTICAL PERCENTAGE ANALYSIS

1. High cost with less sales

2. Sales are less with 8.37%, Cost of goods increased by 6.67% & Operating expenses increased by
20%.
3. Cost of goods can cause to increase the SRP of the cause which would eventually lessen sales
due to higher prices.

RATIO ANALYSIS

1. Inventory turn-over is lesser on 2021 than on 2022 while the Return on assets is higher on 2021
vs 2022.
2. The future of Stress-buster company will be a little stressful given the company is in a slow
decline and would be bankrupt if not solved.

3. The increase in Gross Profit Margin with the decrease of Net Profit Margin shows that sales are
lower with cost getting higher in particular with the other cost such as labor, logistics &
overhead cost. While the increase in Debt-to-Equity ratio can be caused by higher debt incurred
while Interest-coverage ratio decrease means lower profits are generated to meet the interest
payments.
4. The grocery store will have a Inventory turnover versus the Computer shop mainly due that the
store have more inventories than a computer shop which offers services. Businesses that deals
with good are more likely have higher inventory turnover than businesses that offers services.