BUSFIN1

(Business Finance)

3RD QUARTER
(Second Sem, SY 2020-2021)

MALOU R. REMON, LPT MBA

Subject Teacher
Be reminded of our class
preliminaries!
VIRTUAL CLASSROOM RULES/REMINDERS!!!
 CHAPTER 1:
INTRODUCTION TO
FINANCIAL MANAGEMENT
TOPIC (WEEK1-2)

Introduction to Business
Finance

Financial Plan
Objectives:

At the end of the lesson, you should be able to

1. define finance and;
2. identify the people who are responsible for financial
management within an organization, their primary
activities, and strategies in achieving the goal of the
organization
Finance in everyday life!

Financial Plan
Finance in everyday life!

A BFinancial Plan
What is Finance?
The science and art of managing money. (Gitman & Zutter, 2012)

Budgeting
The act of estimating revenue
and expenses over a period of
time.

Financial Plan
Goals of Finance
Categories of Finance

Financial Plan
CLASSIFICATION OF FINANCE:
as to form of negotiation
✗ Direct Finance ✗ Indirect Finance
CLASSIFICATION OF FINANCE: as to
users
✗ Public Finance ✗ Private Finance
Business Finance

Small Multinationa
Corporate
Business l Business
Finance
Finance Finance
Business Finance

Small Multinationa
Corporate
Business l Business
Finance
Finance Finance
FINANCIAL MANAGEMENT
 Sometimes called business finance or
corporate finance, is the specialty area of
finance concerned with financial decision-
making within a business entity.
 Deals with decisions that are supposed to
maximize the value of shareholder’s
wealth. (Cayanan).

Financial Plan
Financial Management

✗ Planning, organizing, leading, and

controlling the financial activities such as
procurement and utilization of funds of the
enterprise.
✗ It means applying general management
principles to the financial resources of the
enterprise.
✗ The Financial Managers focuses on three issues:
1. Capital Budgeting. Process of planning and managing a
firm’s long-term investments.
2. Capital Structure. Considers the mix of debt and equity
in the firm’s with the view to maximize firm value.
3. Working Capital. Planning and managing the firms
current assets and liabilities.
 ROLES:
Board of Directors
a. President / Chief Executive
 The highest policy-making body in a corporation. Officer
 Its primary responsibility is to ensure that the corporation
is operating to serve the best interest of the
stockholders.
b. Board of Directors
OTHER RESPONSIBILITIES:
 Setting policies on investments, capital structure and
dividend policies. c. Shareholders/Stockholders
 Approving company’s strategies, goals and budgets.
 Appointing and removing members of the top
management including the President.
 Determining top management’s compensation.
 Approving the information and other disclosures reported
in the financial statements
 ROLES/RESPONSIBILITIES:

President/CEO
a. President / Chief Executive
 Overseeing the operations of a company and Officer
ensuring that the strategies as approved by the
board are implemented as planned.

 Performing all areas of management: planning, b. Board of Directors

organizing, staffing, directing, controlling.

 Representing the company in professional, social,

and civic activities.
c. Shareholders/Stockholders
ROLES:

Shareholders
a. President / Chief Executive
Officer
 Elect the Board of Directors (BOD).

 Carry out the objectives they have set.

b. Board of Directors

c. Shareholders/Stockholders
Corporate Organization Structure

Shareholders
(c)

BOD (b)

President/CEO
(a)

Vice Vice Vice

Vice President
President President President
for
for for Finance for
Administration
Marketing   Production Financial Plan
 
 
 VP for Marketing
 Formulating marketing
strategies and plans.
 Directing and coordinating
company sales.
 Performing market and
competitor analysis.
 Analyzing and evaluating the
effectiveness and cost of
marketing methods applied.
 Conducting or directing research
that will allow the company
identify new marketing
opportunities
 Promoting good relationships
with customers and distributors.
VP for Production
 Ensuring production meets
customer demands.
 Identifying production
technology/process that
minimizes production cost
and make the company cost
competitive.
 Coming up with a
production plan that
maximizes the utilization of
the company’s production
facilities.
 Identifying adequate and
cheap raw materials
suppliers.
VP for Administration
 Coordinating the functions
of administration, finance,
and marketing
departments.
 Assisting other departments
in hiring employees.
 Providing assistance in
payroll preparation, payment
of vendors, and colllection of
rceivables.
 Determining the location
and the maximum amount of
office space needed by the
Financial
company. Plan
 Identifying means,
processes, or systems that
will minimize the operating
costs of the company.
FUNCTIONS OF A VP FOR FINANCE / CHIEF FINANCIAL
OFFICER / FINANCIAL MANAGER
1. Financing decisions- include making decisions as to how to finance long-term
investments and working capital-which deals with the day-to-day operations of the
company... .

Capital Structure
– how much of your
total assets is financed
by debt and how
much is financed by
equity.
Financial Plan
FUNCTIONS OF A FINANCIAL MANAGER

2. Investing Decisions – Investments may either be short-term or

long-term.
• To minimize the probability of failure, long-term investments
should be supported by a capital budgeting analysis.

• When a company is in an excess cash position, short-term

investment decisions are needed.

Financial Plan
FUNCTIONS OF A FINANCIAL MANAGER
3. Operating Decisions – deal with the daily operations of the company especially
on how to finance working capital accounts such as accounts receivable and
inventories.
 The choice is on whether to finance working capital needs by long-term or short-
term sources.

Short-term Sources Long-term Sources

– payable in at most – mature in longer
12 months. periods
– examples: banks
and suppliers’ credit
Financial Plan
FUNCTIONS OF A FINANCIAL MANAGER

4. Dividend Policies – Dividend is a part of profits that are available for

distribution, to equity shareholders. The Finance Manager must decide whether the
firm should distribute all the profits or retain them or distribute a portion and retain
the balance. Two conditions must exist:

1. The company must

have enough retained 2. The company must
earnings (accumulated have cash.
profits) to support cash
dividend declaration.
Financial Plan
Key Individuals in the Financial Department
CHIEF
FINANCIAL
OFFICER
TREASURER CONTROLLER
What is the importance of finance?

Financial Plan
Financial Plan