Finance 

is a broad term
that describes activities
associated with banking,
Leverage or debt,
credit, capital markets,
money, and investments
by individuals, business
and governments.
Basically, finance
represents money
management and the
process of acquiring
needed funds.
THE FOUR
FINANCIAL AREAS

 Personal Finance
-Personal finance may involve paying for
education, financing durable goods such
as real estate and cars, buying insurance,
e.g. health and property insurance,
investing and saving for retirement.
 Corporate Finance
-Corporate finance deals with the sources
of funding and the capital structure of
corporations and the actions that managers
take to increase the value of the firm to the
shareholders, as well as the tools and
analysis used to allocate financial
resources.
 Investments
-Broadly speaking this deals with
financial assets such as stocks and
bonds.
 Financial Institutions

-Financial institutions are basically businesses

that deal primarily in financial matters. Banks and
insurance companies would probably be the most
familiar to you. Institutions such as these employ
people to perform a wide variety of finance-
related tasks. For example, a commercial loan
officer at a bank would evaluate whether a
particular business has a strong enough financial
position to warrant extending a loan. At an
insurance company, an analyst would decide
whether a particular risk was suitable for insuring
and what the premium should be.
• Income Statement:
Income Statement,
also known as the
Profit and Loss
Statement, reports
the company's
financial
performance in
terms of net profit
or loss over a
specified period.
 Example of income statement

The primary advantage of the income statement is the

information it gives on revenues. Provides information
concerning return on investment, risk, financial
flexibility, and operating capabilities and one of the
most important documents for investors looking to buy
stock in a particular company.
• Balance Sheet: Balance Sheet, also known as
the Statement of Financial Position, presents
the financial position of an organization at a
given date.
Example of balance sheet
 Balance Sheet helps to communicate
information about the financial position of the
business at a particular moment in time and It
can give an indication of the financial strength
of the business and can also indicate the relative
liquidity of the assets. It also gives some
information on the liabilities of the business and
when they will fall due. The combination of this
information can assist the user in evaluating the
financial position of the business. It helps in
comparison of assets and liabilities of business on
two dates to ascertain the progress being made
by business.
 • Cash Flow Statement: Cash Flow
Statement, presents the movement in
cash and bank balances over a period.
Example of cash flow statement
 Cash flow statement provides
adequate information as regards to
the inflows and outflows of cash
resources to and from the
enterprise. It helps the
management a lot for future cash
planning of the enterprise. It
evaluates the level of efficiency of
the management of the enterprise
as regards to the uses of its cash
resources.
Income Statement is composed of
the following two elements:
• Income: What the business has
earned over a period (e.g. sales
revenue, dividend income, etc)
• Expense: The cost incurred by
the business over a period (e.g.
salaries and wages, depreciation,
rental charges, etc) Net profit or
loss comes by deducting expenses
from income.
It includes the following three elements:
• Assets: Something a business owns or
controls (e.g. cash, inventory, plant and
machinery, etc)
• Liabilities: Something a business owes
(e.g. creditors, bank loans, etc)
• Equity: This represents the amount of
capital that remains in the business
after its assets are used to pay off its
outstanding liabilities. Equity therefore
represents the difference between the
assets and liabilities.
Cashflow Statement is composed of the
following two elements:

• Operating : Represents the cash

flow from primary activities of a business.
• Investing : Represents cash flow from
the purchase and sale of assets other than
inventories (e.g. purchase of a factory
plant)
• Financing : Represents cash flow
generated or spent on raising and repaying
share capital and debt together with the
payments of interest and dividends.
 Financial ratio
analysis is the technique
of comparing the
relationship (or ratio)
between two or more
items of financial data
from a company's
financial statements. It
is mainly used as a way
of making fair
comparisons across time
and between different
companies or industries.
• Profitability ratios measure the firm’s use of its assets and
control of its expenses to generate an acceptable rate of
return.

The higher the ratio is, the more profitable the company is
from its operations. For example, an operating margin of 0.5
means that for every dollar the company takes in revenue, it
earns $0.50 in profit. A company that is not making any money
will have an operating margin of 0: it is selling its products or
services, but isn’t earning any profit from those sales.
Example of profitability ratio
• Liquidity ratios measure the availability of cash to pay debt.

Let’s take an example. Company A  and Company C want to

purchase a new manufacturing machine from Company B. However,
Company B will sell at their determined price to the first company
with the capital to pay. Capital A has the majority of their money
wrapped up in inventory (i.e. holding products for sale) which they
expect to sell within 4 weeks, while Company C has their capital in a
savings account. Company C will capture the opportunity, as the
capital they are using is more liquid.
Activity ratios, also called efficiency ratios,
measure the effectiveness of a firm’s use of
resources, or assets.

This ratio gives information about how

quickly or how much time it takes for the
conversion of inventory into sales and thus
ultimately in cash. The formula to compute
inventory turnover ratio is the cost of
goods sold divided by the average
inventory for a specified period, usually a
year.
Example of activity ratio
 Debt, or leverage, ratios measure the firm’s ability to repay long-term
debt.
 Market ratios are concerned with shareholder
audiences. They measure the cost of issuing stock
and the relationship between return and the value
of an investment in company’s shares
Faking numbers in the accounting segment of
an organization is not only fraudulent but
wrong. An organization who fails to report is
an organization that will soon not be able to
provide care for suffering patients – costing
you lives in the end.
Asset Misappropriation
This term includes using organizational funds
for things other than the organization. As
ethical as this may sound, it is damaging to
the financial reporting side of the
organization. Without noticing, this creates
an intricate web of missing funds that can
mean disaster for the organization.
Disclosure Concerns
If a loss happens, they may choose to hide
this loss from potential investors to create a
facade of success. This type of disclosure is
unlawful and dangerous. An organization that
is deceitful in its disclosure may lose more than
one investor at a time. This creates less
funding for the organization and an almost stat
loss of care to patients.
Executive Focusing
From accountants to billing
specialist, the team may feel as if they
need to fake numbers or not disclose
certain information due to the ideation
of the executive. These executives are
then free to spend fake money on
purchases outside of the organization
and to gain investors to create a rise in
their income and power.
No Direct Chain of Command
Every industry must have a proper chain of
command in order to provide the best
financial reporting and analysis.
If an employee notices a problem within the
organization’s reporting, it should be reported
and follow this chain to ensure something is
done.
Furthermore, an enterprise without a chain of
command creates hardships for the patients
who wish to report.
A budget is an estimate of
income and expenditure for
a set period of time i.e. it is
an itemized summary of
likely incomes and expenses
for a given period.
A government budget is a
government document
presenting the
government's proposed
revenues and spending for a
financial year. It’s an
invaluable tool to help you
prioritize your spending and
manage your money.
Budgeting is simply
balancing your expenses
with your income
Creating a budget helps you
understand how much money
you have, how much you have
spent, and how much money
you will need in the future. A
budget can drive important
business decisions like cutting
down on unwanted expenses,
increasing staff, or purchasing
new equipment. 
 A budget is a road map for your business. It
helps you predict cash flow, identify functional
areas that need improvement, and run your
operations smoothly. Successful businesses invest a
lot of time and effort into creating realistic budgets,
because they’re an efficient way of tracking the
extent to which the business has achieved its
goals. 
 Creating a budget can get a bit overwhelming for
new businesses as there are no previous figures to
guide their budget estimates, but with some
estimates based on the performance of
competitors and an understanding of the
components of a budget, you can complete your
first budget and have a good road map for future
budgets.
 Prepare financial statements,
1 business activity reports, and
forecasts,

Monitor financial details to

2 ensure that legal requirements
are met,

Supervise employees who do

3 financial reporting and
budgeting,

4 Review company financial

reports and seek ways to reduce
costs,

Analyze market trends to find

5 opportunities for expansion or
for acquiring other companies,

Help management make financial

6 decisions.
 Analytical skills.
Financial managers
increasingly assist
executives in making
decisions that affect the
organization, a task for
which they need
analytical ability.
 Communication.
Excellent
communication skills
are essential because
financial managers must
explain and justify
complex financial
transactions.
 Attention to detail. In
preparing and analyzing
reports such as balance
sheets and income
statements, financial
managers must pay
attention to detail.
 Math skills.
Financial managers
must be skilled in math,
including algebra. An
understanding of
international finance
and complex financial
documents also is
important.
 Organizational
skills.
Financial managers
deal with a range of
information and
documents. They must
stay organized to do
their jobs effectively.
 Submitted to:
Mr. Alvin Jay Alquesor
Submitted by:
Ashley Julian Sheldon Buccahan
Joshua Castillo Maui Arellano
Nicole Belmil Generel Jallorina
Aristone Lagasca