BUSINESS Finance

ZOE REGINA C. CASTRO, CPA, MBM

 REALITY>>>>>
 Money required to carry out business activities is
called Business Finance.
 Finance
is required to establish, run, modernize,
expand and diversify a business.
FINANCIAL MANAGEMENT

 Financialmanagement is concerned with

the proper management of funds and
involves decisions relating to efficient
acquisition and allocation of funds.
MAJOR DECISIONS 

  Investment decisions
 Financing Decisions
 Dividend Decisions
Investment decisions

 Thisdecision is about
how much fixed and
working capital will be
needs to acquire fixed
assets and to meet day-
to-day requirements of
funds.
Financing Decisions
 This decisions is about
how to raise or procure the
necessary capital funds.
The main sources of funds
are shares, debentures,
public deposits or loans,
loans from financial
institutions, etc.
Dividend Decisions
 It involves deciding how
much of the net profit of
the firm will be
distributed as dividend
and the extent to which
it will be retained in the
business to meet the
future requirements.
OBJECTIVES 

 Profit Maximization
 Wealth Maximization
Financial planning

 Financialplanning refers to the process

and functions of determining capital
requirements of a business and deciding
the various sources from which it can be
procured. • It is required to tackle the
uncertainty in respect of availability and
timings of funds.
Importance
 Itseeks to eliminate waste of funds and provide
better financial control.
 Ittakes care of inflow and outflow of funds and
ensures liquidity throughout the year.
 It aims at efficient and optimum utilization of
surplus funds for the benefit of business.
 Itensures increased profitability through cost-
benefit analysis and by avoiding wasteful
operations
Capital structure

 Itrefers to the make-up or composition

of the total funds raised by the
company, also known as Capital Mix.
 In other words , it refers to the mix
between Owners and Borrowed funds i.e.
Debt and Equity.