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SIMPLIFIED BY FLORENDO D. DAMASO, JR.

, CBE INSTRUCTOR
Nature of Business Finance

Management of
Business Financial Resources
Finance Processes Organizational
Provision/ Objectives
Procurement Profitability
Proper Allocation Growth
Efficient Utilization Stability
Liquidity
A. Provisions of the Financial
Resources
Considerations:
1. Status of the Firm
New Firm Capital
Existing Firm Expansion
New Product
Exigency of an
opportunity
A. Provisions of the Financial
Resources
Considerations:
2. Terms of Payment
Short-term
Financing
1 year or less

Long-term
More than a year
Financing
Depends on the capability of the Firm to Pay its obligation.
A. Provisions of the Financial
Resources
Considerations:
3. Sources of Financing
Owners/Investors Primary source
Lending • Commercial Banks
Institutions • Thrift Banks
•Investment Firms
•Private Financing Companies • Rural Banks
•Insurance Companies • Specialized Government Banks
•Pawnshops
•Fund Managers • Non-bank financial
•Others
intermediaries
B. Proper Allocation of the
Financial Resources
Considerations:
 Aligned with Firm’s Objectives and Plans
 Ranked according to importance (Prioritization)
! Financial Decision Making
Profitabilit
Risks
y
C. Utmost Efficiency of the
Financial Resources
C. Utmost Efficiency of the
Financial Resources
Considerations:

Resources = Intention
Wastages
Delays
Pilferage
Importance of Finance in Business
FACTS Runs business
Grows business
Bankrupts business

Financial Decision Making


Top Management
 BOD
 CEO CFO
Importance of Finance in Business

Positions business

Business Portfolio/ Investment


Portfolio Financial Decision Making
Top Management
 BOD
 CEO CFO
The Goals and Objectives of Business
Organizations
Earn Profit
Increase Value of Business
Fulfill Social Responsibilities

PROFITABILITY GROWTH SURVIVAL


The Financial Manager
Adviser of the Firm

a. Identification and Analysis Decisions


b. Financial Planning and Strategy
c. Capital Structure of the Organization
d. Stock Price and Dividends
e. Control of Cash and other Assets
The Financial Manager
a. Identification and Analysis

STRENGTHS WEAKNESSES

OPPORTUNITIES THREATS
The Financial Manager
b. Financial Planning and Strategy
Fund Raising
Maximization of Profit
Expansionary Development
Portfolio Management
The Financial Manager
c. Capital Structure of the Organization

Study of Financial Statements


Assets Liabilities Equities
The Financial Manager
d. Stock Price and Dividends

Investments
Stock Market Monitoring

Dividends Management
ROI to Investors
The Financial Manager
e. Control of Cash and other Assets

Budgeting Idle Funds


Accounting Imbalanced cash
Auditing Personal Intentions
Reporting Misleading Info