BUSINESS FINANCE

Quarter 1 | Module 1
Definition of Finance and Identifying the Roles in a
Corporate Organization

Raymond C. Lumibao
Subject Teacher
 Good day
everyone!
How are you doing today?
 Lesson Objectives

• Define Finance
• understand the key positions in a corporate
organization and identify the roles of each.
• identify the primary activities of the financial manager.
 Activity 1:
Life of a Senior High School Learner

Instruction: Answer the following questions:

1. As a senior high school student, how much allowance do you usually
receive and how often do you receive it (daily, weekly, etc.)
Amount of allowance : ______________ How often :_______________

2. List down the activities that you usually do from getting to school until
going back home.
________________________________________________________
________________________________________________________

3. Do you have savings out of the allowance that you received?

Yes :______ No:_______
 Activity 1:
Life of a Senior High School Learner (Before pandemic)

Instruction: Answer the following questions:

4. Identify the expenses that you usually incurred when you go to
school.
________________________________________________________
______________________________________________________

5. Do you agree with the importance of saving money? Why?

________________________________________________________
________________________________________________________

**Most of the activities that you do involving decisions on where

to use your allowance is a finance decision.
 Activity 2:

Instruction: Answer the following questions:

1. What words come into your mind when you hear the word finance?
Write at least five words which is closely associated with it.

2. In your own words, how would you define finance ?

 What is FINANCE?

Finance can be defined as the

science and art of managing
money. (Gitman & Zutter, 2012)
 Activity 3:

Instruction: Answer the following questions:

1. Go back to the list of expenses that you write in Activity 1.1 no. 4
and this time you will be asked for the total peso amount of the
listed items.

2. If the peso amount exceeds your daily allowance, which items

should be dropped off from the list. Cross out the items dropped but
do not erase completely. Continue this until total items remaining in
the list can be covered by the daily allowance.
 Facts
1. Budgeting is the act of estimating revenue and
expenses over a period of time.
2. Excess money presents an opportunity for
investments. Investments come in many forms that
will generate income or appreciate in the future.
3. Focus your attention on the surplus resulting
from your budgeting. This resulted in savings or
excess cash. What will you do with the excess
money?
 Activity 4:

Instruction: Answer the following questions:

1. If ever there are situations where you are short of cash,

what would you do?
2. Where will you get extra cash? What other sources of
cash do you know?
 Facts

Sources of funds. When faced with financial

difficulties (in this case, the lack of funds to meet
the current expenses) we look for people or
institutions that will give us the money we need.
 The Corporate
Organization Structure

Every organization has corporate structure to illustrate

the roles and functions of each employee.
 SHAREHOLDER
The shareholders elect the Board
of Directors (BOD). Each share
held is equal to one voting right.

BOARD OF
DIRECTORS
The board of directors is the highest policy
making body in a corporation.
 The Responsibilities of a
Board of Directors
1. Setting policies on investments, capital structure and dividend
policies.
2. Approving company’s strategies, goals and budgets.
3. Appointing and removing members of the top management
including the president.
4. Determining top management’s compensation.
5. Approving the information and other disclosures reported in the
Financial statements
(Cayanan 2015)
 The Responsibilities of a
President or CEO

1. Overseeing the operations of a company and ensuring that the

strategies as approved by the board are implemented as planned.
2. Performing all areas of management: planning, organizing,
staffing, directing and controlling.
3. Representing the company in professional, social, and civic
activities.
4. Carries out the decision making for all functions
 VP for Marketing
1. Formulating marketing strategies and plans.
2. Directing and coordinating company sales.
3. Performing market and competitor analysis.
4. Analyzing and evaluating the effectiveness and cost of marketing
methods applied.
5. Conducting or directing research that will allow the company
identify new marketing opportunities, e.g. variants of the existing
products/services already offered in the market.
6. Promoting good relationships with customers and distributors.
(Cayanan, A. 2015)
 VP for Production

1. Ensuring production meets customer demands.

2. Identifying production technology/process that minimizes
production cost and make the company cost competitive.
3. Coming up with a production plan that maximizes the utilization of
the company’s production facilities.
4. Identifying adequate and cheap raw material suppliers.
(Cayanan, A. 2015)
 VP for Administration

1. Coordinating the functions of administration, finance, and

marketing departments.
2. Assisting other departments in hiring employees.
3. Providing assistance in payroll preparation, payment of vendors,
and collection of receivables.
4. Determining the location and the maximum amount of office space
needed by the company.
5. Identifying means, processes, or systems that will minimize the
operating costs of the company. (Cayanan, A. 2015)
Functions of a
Financial Manager(VP for Finance)

The four functions of a VP for finance (CFO) a

re as follows:
1. Financing
2. Investing
3. Operating
4. Dividend Policies
 The role of
VP for Finance

1. 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.).
Capital Structure

Capital structure refers to how much of your total assets is

financed by debt and how much is financed by equity.
 The role of
VP for Finance

2. Investing
Investing is where to put your excess cash to make it
more profitable.
Investments may either be Short Term or Long Term.
Short term investment decisions are needed when the
company is in an excess cash position. To plan for this, the
Financial Manager should be able to make use of
Financial Planning tools such as budgeting and
forecasting.
Long term investments should be supported by a capital
budgeting analysis which is among the responsibilities of a
finance manager. Capital budgeting analysis is a tool to
assess whether the investment will be profitable in the
long run.
 The role of
VP for Finance

3. Operating
Operating decisions 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.
Short-term sources
• From banks and supplier's credit
• Payable in at most 12 months
• Lower interest rate

Long-term sources
• Higher interest rate
• Gives the company to accumulate cash
to pay off the obligation in the future
 The role of
VP for Finance

4. Dividend Policies
Cash dividends are paid by corporations to existing
shareholders based on their shareholdings in the
company as a return on their investment.
Before a company may be able to declare cash
dividends, two conditions must exist:

1. The company must have enough retained

earnings (accumulated profits) to support cash
dividend declaration.
2. The company must have cash.
QUESTION TIME
 Assignment #1

Look for the meaning of the following and

Write on your Assignment notebook

1. Financial Markets
2. Financial Institutions
3. Private Placements
4. Public Offerings
5. Financial Instruments
 THANK YOU
Be safe, always!