FINANCIAL

MANAGEMENT
and CONTROL
ACCOUNTING
 is the art of recording, classifying and
summarizing in a significant manner and in
terms of money transactions and events which
are, in part at least, of a financial character
and interpreting the results thereof.
FINANCIAL MANAGEMENT

 Wealth maximation through daily activities

such as credit and inventory management
and through long-term decisions related to
raising funds.
MANAGERIAL CONTROL

 Methods and mechanisms that managers use

to ensure that employees’ behavior and
performance conform to the organizations’
objectives, plans and standards.
 TYPES OF BUSINESS

 Single Proprietorship
 Partnership
 Corporation
 Cooperative
BASIC ACCOUNTING
PRINCIPLES
 ACCOUNTING EQUATION

Assets =Liabilities +
Owner’s/Stockholders Equity
PRINCIPLES OF ACCOUNTING
 Relevance
 Reliability
 Comparability
 Consistency
 Going Concern
 Matching
 Cost Benefit
 Materiality
 Conservatism
ACCOUNTING CYCLE

 Identification and Recording

of Transaction
 Journalizing
 Posting
 Unadjusted Trial Balance
 Adjustments
FINANCIAL STATEMENT

 Income Statement
 Balance Sheet
 Cash Flow Statement
 Statement of Retained

Earnings
CASH VERSUS ACCRUAL
ACCOUNTING
ACCOUNTING ELEMENTS
 Assets
 Liabilities
 Equity
 Investment by Owners
 Distribution to Owners
 Comprehensive Income
 Revenue
 Expenses
 Gains
 Losses
AREAS OF ANALYSIS

 Liquidity
 Stability
 Profitability
 Growth Potential
 FINANCIAL RATIOS
Liquidity

Current Ratio = Current Assets__

Current Liabilities

Quick Ratio = Current Assets- Inventory

Current Liabilities
Profitability

Gross Profit Margin =

Net Sales–Cost of Sales
Net Sales

Net Profit Margin = Net Income After Tax

Net Sales

Return on Assets = Net Income After Tax

Average Total Assets

Return on Equity = Net Income After Tax

Stockholders Equity
FINANCIAL ANALYSIS AND
PLANNING
WORKING CAPITAL

MANAGEMENT
LONG–TERM
FINANCING
INTERNAL/EXTERNAL CONTROL
MEASURES

 Internal Auditing
 External Auditing
BUDGETING
Definition

 is the process of defining proposed

expenditures within categories and linking
the proposed expenditures to objectives.
 OBJECTIVES

 Assist managers in planning their work more

effectively

 Assist in allocating resources

 Assist in controlling and monitoring resources

utilization during the budget period.
TYPES OF BUDGET

 Sales Budget
 Materials Budget
 Loan Budget
 Capital Budget
 Research & Development

Budget
 Cash Budget
 ZERO BASED BUDGETING (ZBB)

 A method of justifying activities and

programs in terms of efficiency,
organizational priorities and if they were
entirely new.
PROJECT MANAGEMENT

 The task of getting a project’s activities

done in time, within budget, and according
to specification.

Project – a one-time-only set of activities that

has a definite beginning and ending point in
time.
ESSENTIAL FEATURES
 Clear definition of project’s objectives

 All activities
 Resources

 Labor

 Materials
 Determination of sequential relationship

 Activities to be completed before others can begin

 Use of flowchart
 Scheduling

 Estimates of time required for each activity

 Develop a morale project and completion date

 Comparison of project schedule with the
objectives

 Adjustments
Project too long, more resources