Introduction to

Finance & Financial

Management
Chapter 1

Jorden Kent Juaner

BUSINESS FINANCE:
AN OVERVIEW
LESSON 1
 What is finance?
What immediately comes
to your mind when you
hear the word finance?
Why do we need to study finance
 FINANCE
Is both science and an art of correct application of the
economic and accounting concepts and principles that
defines the system structure, and process of
management, allocation, and utilization of financial
resources, investments, and expenditures.
Finance Definition Key
Concepts:
• Both a science and an art
• Application of economic and accounting,
concepts and principles
• System, structure, and process
• Management, allocation, and utilization
• Financial resources, investments, and
expenditures
 Explain why finance is both a
science and an art

QUICK Differentiate accounting from

economics
CHECKINS

Discuss the key terms in the

operational definition of
finance
 AREAS
OF
FINANCE
FINANCE IN A BUSINESS
ORGANIZATION
 FUNCTION OF FINANCE
OPERATING DECISIONS
Credit and Collection
Level of Inventory
Discounts & Budgeting
Payment Control of Operating Expenditures
Daily Operating Decisions
FINANCIAL
DECISIONS
INVESTING DECISIONS FINANCING DECISIONS
Non-current asset acquisition Equity financing
Investment portfolio Debt financing
Pricing decision of stocks and bonds Cost of capital and borrowing
Discounted cash flow analysis in capital Short-term and long-term borrowings
budgeting Interest rate
Board of Directors

CEO/ President

Vice President LEVEL OF

Director
FINANCE IN
ORGANIZATIO
Manager
N
Supervisor

Associate
CAREERS IN FINANCE

What are the CAREERS we

can have if we choose
FINANCE as PROFESSION
 Profit realization and wealth maximization
should not be the only goal of finance
profession. Protecting the rights of the
ETHICAL consumers and the business community in
general should be parallel with the goal of
STANDARS IN profit accumulation.
PRACTICING
FINANCE The ethical and social responsibilities of the
finance professional manifest in the pricing
PROFESSIONS policy of the business, allocation of funds on
waste disposal system, as well as on climate
and wildlife protection. Finally, the finance
professionals must never be involved in an
embezzlement case and fraud practices.
 Develop an image using different
words that will show, explain and
understand the definition of finance.
(15 Points)
WORD
COLLAGE
FINANCIAL
INSTITUTIONS,
INSTRUMENTS,
AND MARKETS

LESSON 2
ANSWER THIS!
Which bank have you already
been to? What transaction
have you performed?
BUSINESS ENVIRONMENT

Economic Socio-cultural
System System

Political Technological
System System

BUSINESS
 STRUCTURE OF FINANCIAL SYSTEM
Cash Returned Cash Payments

Cash
Investments
Household Savings/
Surplus Cash
*Financial Institutions
Cash Loans Borrowers
*Financial Markets *Individuals
*Corporate Entities
*Financial Instruments
Business Savings/
Surplus Cash
Cash
Investments

Cash Returned
Cash Payments
 Depository Intuitions

• Banks
• Savings and Loan Associations
• Trust Companies
• Credit Unions
FINANCIAL Financial Intermediaries
INSTITUTIONS
• Mutual Funds
• Pension Funds
• Insurance Companies

Investment Institutions
 Capital Market

Money Market
FINANCIAL Primary Market
MARKETS
Secondary Market

Public Market
 FINANCIAL INSTRUMENTS

Cash Check Loan Bond Stock

 Create an illustration that will
describe the major role of financial
management and the different
individuals involved distinguish a
ACTIVITY financial institution from financial
instrument and financial market
(15 Points)