INTRODUCTION

TO
BUSINESS FINANCE

Ms. Alyssa Villorente

OLC
 WHAT ARE YOU GRATEFUL FOR
TODAY?

(Ano yung isang bagay na ipinagpapasalamat

mo ngayong araw na ito?)

I am grateful for _________________.

or
Pinagpapasalamat ko po today ang
___________________.
Grateful people sleep better.
-Spend just 15 minutes jotting down a few grateful sentiments
before bed, and you may sleep better and longer.

Gratitude improves psychological health.

-Gratitude reduces a multitude of toxic emotions, ranging from
envy and resentment to frustration and regret.

Gratitude improves self-esteem.

-Studies have shown that gratitude reduces social
comparisons. 
Life Lesson for this Week…..

 Count your blessings. Have a GRATEFUL

HEART.
The success of other people will not diminish
your own success.
(Ang tagumpay ng ibang tao ay hindi ikakabawas
ng tagumpay na inilaan ng Diyos para sayo).
How to Pronounce F-i-n-a-n-c-e?

\fai·nans\

How to Pronounce F-i-n-a-n-c-i-a-l?

\fai·nan·shl\
In this lesson you should be able to…
Learn the basic concepts of finance.
Explain the major role of financial management and the different
individuals involved
Enumerate the various functions of the Financial Manager
Compare and contrast the basic types of financial instruments
Distinguish a financial institution from financial market
Classify institutions as banking and non-banking financial
institutions
Enumerate and distinguish the different types of financial
institutions and financial markets
Explain the flow of funds.
How much is your daily allowance?

From your daily allowance, how much money are

you spending?

What do you do, with the money left?

Where do you get additional money?

What is Finance?

Finance is the art and science of managing

money.
Finance is the art and science that describes
the management, creation and study of
money, banking, credit, investments, assets
and liabilities.
Budgeting

 is a spending plan based on income and

expenses. In other words, it’s an estimate of
how much money you’ll make and spend over
a certain period of time, such as a month or
year.
Investments

An investment is essentially an asset that is

created with the intention of allowing money
to grow.
Sources of Funds

people/institutions that would gave you

money or any monetary materials.
Finance is concerned with decisions about…….

How much of the earning are spent?

How much they save or need?
How they invest their savings
How they raise their additional needed fund?
3 General Areas of Finance

Personal Finance
is the process of planning and managing personal financial activities such as income
generation, spending, saving, investing, and protection.

Public Finance
-refers to that branch of finance which studies government financial dealings,
including government spending, borrowing, deficits and taxation. 

Corporate Finance
 -is concerned with how businesses fund their operations in order to maximize
profits and minimize costs.
What is Business?

- is defined as an organization or enterprising

entity engaged in commercial, industrial, or
professional activities.
What are the Four Types of Business?

Manufacturing
- transforms raw materials into a new product
Service
-  intangible products
Merchandising
- buy and sell goods
Hybrid
-possess the characteristics of two or more types of business.
What is Business Finance?

Business finance refers to money and credit

employed in business. It involves procurement and
utilization of funds so that business firms may be
able to carry out their operations effectively and
efficiently.
What are the Objectives of Business Finance?

Profit Maximization


-is a traditional and narrow approach where business

entities determine the best output and price levels in
order to maximize its return.


Wealth Maximization
-is the concept of increasing the value of a business in
order to increase the value of the shares held by its
stockholders.
Key Individuals in Business Finance

 Financial Manager

Controller

Treasurer
Functions of the Financial Manager

Forecasting Financial Requirements

Acquiring Necessary Capital
Investment Decision
Cash Management
Interrelation with Other Departments
Financial System

is a set of institutions which allow the exchange of funds

between lenders, borrowers and investors.
The functions of the financial system is to channel the
funds from lenders to the borrowers, provide a medium of
exchange, provide a mechanism for risk sharing and
provide a channel through which the central bank can
influence the economy.  
Financial Instrument

 is the written legal obligation of one party to transfer a thing of

value, usually money, to another party at some future date, under
certain conditions.

Stocks - type of security that signifies ownership in a corporation and

represents a claim on part of the corporation's assets and earnings.
Bonds -is a debt security in which an investor lends his money to an
entity which borrows the funds for a defined period of time at defined interest
rate.
Notes -is a debt security obligating repayment of a loan with a
corresponding interest within a defined period of time.
 STOCK
CHEQUES CERTIFICATE
Financial Markets

is where stocks, bonds and other financial

securities can be purchased or sold.

• Money Market- is where debt securities with an original maturity

of one year or less are traded as well as long-term securities having at
least six months left to maturity.

• Capital Market- is where securities with maturity of more than one

year are traded.
Financial Markets

Foreign Exchange Market

-is where participants can be able to buy, sell, exchange and speculate on currencies.

Fixed Income Exchange Market

-these are investments that provide return in the form of fixed periodic payments and the
eventual return of principal at maturity. This may include treasury bonds and certificate of deposits.

Stock Market
-The Philippine Stock Exchange (PSE) is a private organization created to provide and
maintain a fair, efficient, transparent and orderly market for the purchase and sale of stocks
and other securities.
Financial Intermediaries

is an entity that acts as the middleman between two parties in

a financial transaction.
It offers a service to help individuals to save or borrow money.

EXAMPLE:
Financial Institution
Financial Institution

is an establishment that provides financial services such

as investments, loans and deposits.

Banking Institution
Non-banking Institution
Banking Institution

A bank is a financial institution that accepts deposits from the

public and creates credit which is being supervised by a regulatory
agency.

Commercial Bank
Investment Banks
Non-banking Institution

is a financial institution that does not have a full banking license or
is not supervised by a national or international banking regulatory
agency.

Credit Unions
Savings and Loan Associations
Insurance Companies
Flow of Funds

Direct Finance
Indirect Finance