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FM 101

The document provides an overview of financial management, defining key concepts such as finance, business finance functions, and management. It outlines the goals of financial management, including maximizing shareholder wealth and effective fund allocation, and describes three forms of business organizations: sole proprietorship, partnership, and corporation. Additionally, it emphasizes the importance of efficient and effective utilization of financial resources in achieving predetermined objectives.

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Vince Abacan
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7 views19 pages

FM 101

The document provides an overview of financial management, defining key concepts such as finance, business finance functions, and management. It outlines the goals of financial management, including maximizing shareholder wealth and effective fund allocation, and describes three forms of business organizations: sole proprietorship, partnership, and corporation. Additionally, it emphasizes the importance of efficient and effective utilization of financial resources in achieving predetermined objectives.

Uploaded by

Vince Abacan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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OVERVIEW

OF
FINANCIAL
MANAGEMEN
T
LEARNING OBJECTIVES
• TO DEFINE FINANCE;
• TO DEFINE THE FUNCTIONS OF BUSINESS FINANCE;
• TO DEFINE THE FINANCING;
• TO DEFINE MANAGEMENT;
• TO HAVE KNOWLEDGE ABOUT FINANCIAL MANAGEMENT;
AND
• TOKNOW THE THREE (3) TYPES/FORMS OF BUSINESS
ORGANIZATIONS.
WHAT IS FINANCE?
• ART AND SCIENCE OF MANAGING MONEY.
• THE ART AND SCIENCE OF MANAGING THE
FINANCIAL RESOURCES OF A BUSINESS.
• STUDY OF HOW INDIVIDUALS, INSTITUTIONS,
GOVERNMENTS AND BUSINESSES ACQUIRE,
SPEND AND MANAGE MONEY AND OTHER
FINANCIAL ASSETS.
FUNCTIONS OF
BUSINESS FINANCE
•ALLOCATION OF FINANCIAL
RESOURCES
•PROCUREMENT OF FUNDS
•EFFICIENT AND EFFECTIVE UTILIZATION
OF FINANCIAL RESOURCES
1. ALLOCATION OF
FUNDS
• IS THE PROJECT NECESSARY?
• WHAT IS ITS SOCIAL RELEVANCE?
• ARE THERE OTHER ALTERNATIVES?
• HOW WILL THE PROPOSAL AFFECT OUR CURRENT
OPERATIONS?
• WHAT RESOURCES OF THE COMPANY CAN BE USED IN THE
PROJECT?
• HOW MUCH IS THE ESTIMATED CAPITAL REQUIREMENT?
1. ALLOCATION OF
FUNDS
• WHAT IS THE ECONOMIC LIFE OF THE PROJECT?
• HOW MUCH ARE THE ESTIMATED CASH RETURNS?
• HOW LONG WILL IT TAKE TO RECOVER OUR INVESTMENT OR
WHAT IS THE PAYBACK PERIOD?
• WHAT IS THE RATE OF RETURN ON INVESTMENT?
• IS THE RATE OF RETURN HIGHER THAN THE COST OF
CAPITAL TO BE USED?
• WHAT ARE THE RISKS INVOLVED IN THE PROPOSAL?
2. PROCUREMENT OF
FUNDS

•THE PROCESS OF
OBTAINING FUNDS AND THE
COSTS INVOLVED.
•FINANCING HAPPENS HERE.
WHAT IS FINANCING?

•THEPROCESS OF PROVIDING
FUNDS FOR BUSINESS
ACTIVITIES, MAKING
PURCHASES OR INVESTING.
3. EFFICIENT AND EFFECTIVE
UTILIZATION OF FINANCIAL RESOURCES

•EFFICIENT – FINANCIAL RESOURCES


ARE ACTUALLY BEING USED FOR WHAT
THEY HAVE BEEN INTENDED.
•EFFECTIVE– REFERS TO THEIR USE
TOWARDS THE ATTAINMENT OF
PREDETERMINED OBJECTIVES.
WHAT IS
MANAGEMENT?
•IT IS THE PROCESS OF POSDCON
P- PLANNING
O- ORGANIZING
S- STAFFING
D- DIRECTING / LEADING
CON- CONTROLLING
WHAT IS FINANCIAL
MANAGEMENT?
•INVOLVES FINANCIAL PLANNING,
ASSET MANAGEMENT AND
FUNDRAISING DECISIONS TO
ENHANCE THE VALUE OF
BUSINESSES.
GOAL OF FINANCIAL
MANAGEMENT
•TO MAXIMIZE THE WEALTH OF THE
SHAREHOLDERS, TO ALLOCATE FUNDS TO
CURRENT AND FIXED ASSETS, TO OBTAIN THE
BEST MIX OF FINANCING ALTERNATIVES, AND
TO DEVELOP AN APPROPRIATE DIVIDEND
POLICY WITHIN THE CONTEXT OF THE FIRM’S
OBJECTIVES.
FINANCIAL MANAGEMENT IN
DIFFERENT PERSPECTIVES:
•GOVERNMENT FM – SCARY SPENDING, NO NEED TO
RETURN EXCESS
•PRIVATE COMPANY FM – CONSERVATIVE BECAUSE
IT HAS RESPONSIBILITY TO THE SHAREHOLDERS TO
GIVE RETURNS IN A FORM OF DIVIDEND (IF
CORPORATION)
•PERSONAL FM – SUSTAINABILITY OF FINANCIAL
RESOURCES
3 FORMS OF BUSINESS
ORGANIZATIONS

•SOLE PROPRIETORSHIP
•PARTNERSHIP
•CORPORATION
SOLE PROPRIETORSHIP

•A FORM OF ORGANIZATION WHERE THERE


IS ONLY ONE OWNER/PROPRIETOR.
•AFTER OPERATING FOR SOME TIME,
HE/SHE INVITES OR GETS INVITED TO
FORM A PARTNERSHIP OR A
CORPORATION.
PARTNERSHIP

•ANASSOCIATION OF TWO OR MORE


PERSONS WHO BIND THEMSELVES TO
CONTRIBUTE MONEY, PROPERTY, OR
INDUSTRY TO A COMMON FUND, WITH
THE INTENTION OF DIVIDING PROFITS
AMONG THEMSELVES.
CORPORATION

•IT IS AN ARTIFICIAL BEING CREATED BY


OPERATION OF LAW, HAVING THE
RIGHT OF SUCCESSION AND THE
POWERS, ATTRIBUTES AND PROPERTIES
EXPRESSLY AUTHORIZED BY LAW OR
INCIDENT TO ITS EXISTENCE.
RIGHT OF SUCCESSION
•A CORPORATION HAS THE RIGHT TO
CONTINUOUS EXISTENCE IRRESPECTIVE OF
DEATH, WITHDRAWAL, INSOLVENCY OR
INCAPACITY OF THE INDIVIDUAL MEMBERS OR
SHAREHOLDERS AND REGARDLESS OF THE
TRANSFER OF THEIR INTERESTS OR SHARES
OF STOCK.
REFERENC
ES:
• BRIGHAM AND HOUSTON. FUNDAMENTALS
OF FINANCIAL MANAGEMENT, CENGAGE
LEARNING, 13TH EDITION
• MEJORADA, N.D. BUSINESS FINANCE AND
PHILIPPINE BUSINESS FIRMS. THIRD
EDITION, MANILA

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