BA 2103

Financial Management
Course Introduction

BA 2103– Financial Management| RCDBadoy | CBA-USeP

 Intended Learning Outcomes
• Summarize the features and functions of
financial management
• Review the basic financial statements
• Explain the relationship of the components
of financial statements

BA 2103 – Financial Management| RCDBadoy | CBA-USeP

 Why do we need to study
Financial Management?

BA 2103 – Financial Management| RCDBadoy | CBA-USeP

• we are affected by globalization and the
borderless economy
• our business operates in an environment that is
rather volatile
• we are faced with challenges to thrive in a very
competitive business environment
• we have many business opportunities with
limited available resources
• we study financial management to ensure that
we have enough cash to keep our business
afloat

BA 2103 – Financial Management| RCDBadoy | CBA-USeP

 Financial Management, described
• Finance is the art and science of managing
money
• the field of Finance is closely related to
economics and accounting
• Economics provides a structure for decision
making in the area of risk analysis; it also
provides a broad picture of the economic
environment that affects the business

BA 2103 – Financial Management| RCDBadoy | CBA-USeP

 Financial Management, described
• Accounting is
sometimes A financial
considered the manager,
language of
therefore, must
finance because
it provides understand
financial data both economics
through financial and accounting
statements

BA 2103 – Financial Management| RCDBadoy | CBA-USeP

 Financial Management, described
• Financial Management refers to capital procurement, funds
allocation, capital restructuring, and profit administration
which involves financial planning, analysis of financial
condition and supervision of financial operations

BA 2103 – Financial Management| RCDBadoy | CBA-USeP

 Financial Management, described
• Financial Management endeavors to make optimal investment,
financing, and dividend/share repurchase decisions

• it concerns the duties of the financial manager in the business

enterprise
BA 2103 – Financial Management| RCDBadoy | CBA-USeP
 Scope of Financial Management
• Financial Management covers working capital
management of the firm, investment/portfolio
analysis, capital investment analysis, and capital
structure
• defines the job of the financial manager

BA 2103 – Financial Management| RCDBadoy | CBA-USeP

 Scope of Financial Management
• the financial manager actively handles the financial affairs of
the business firm
• among other things, task involves
• financial planning and forecasting
• making investment and financing
decisions
• risk management

BA 2103 – Financial Management| RCDBadoy | CBA-USeP

 Scope of Financial Management

• goal of financial management is

more than just profit maximization;
it is value maximization --
maximizing shareholder’s wealth

BA 2103 – Financial Management| RCDBadoy | CBA-USeP

 The Finance Function
• the size and importance of the finance function
depend on the size of the firm
• in smaller firms, the finance function is generally performed
by the accounting unit
• for bigger firms, there is a need for separate unit to handle
the task
• large corporations usually have a chief financial officer (CFO)
to whom the treasurer and the controller report

BA 2103 – Financial Management| RCDBadoy | CBA-USeP

 The Finance Function
Treasurer

• also known as the Chief Financial Manager, is the one

responsible for the firm’s financial activities including financial
planning, raising funds, making capital budgeting decisions,
and managing the firm’s working capital

BA 2103 – Financial Management| RCDBadoy | CBA-USeP

 The Finance Function
Controller

• also called the Chief Accountant, is in-charge of the firm’s

accounting activities such as corporate accounting, tax
management, financial accounting, and cost accounting
BA 2103 – Financial Management| RCDBadoy | CBA-USeP
 The Finance Function
• the functions of finance involve three major decisions
companies make
• investment decision
• financing decision
• dividend decision

BA 2103 – Financial Management| RCDBadoy | CBA-USeP

 The Finance Function
Decision Description
Investment Provision of capital to proposals whose
Decision benefits are to be realized in the future
Investments in capital projects should provide
expected returns in excess of what financial
markets require

BA 2103 – Financial Management| RCDBadoy | CBA-USeP

 The Finance Function
Decision Description
Financing Determination of the best capital structure
Decision Capital structure involves determining the best
mix of debt, equity, and hybrid securities to
employ

BA 2103 – Financial Management| RCDBadoy | CBA-USeP

 The Finance Function
Decision Description
Dividend Allocation of cash to be distributed to
Decision shareholders
Excess cash can be distributed to stockholders
directly through dividends

BA 2103 – Financial Management| RCDBadoy | CBA-USeP

 The Finance Function

BA 2103 – Financial Management| RCDBadoy | CBA-USeP

BA 2103 – Financial Management| RCDBadoy | CBA-USeP
 Financial Statements
• Statement of Financial Position (SFP)
– assets, liabilities, owner’s equity
• Statement of Comprehensive Income (SCI)
– revenues, costs and expenses, profit/loss

BA 2103 – Financial Management| RCDBadoy | CBA-USeP

 Financial Statements
• Statement of Changes in Owner’s Equity (SCE)
• Statement of Cash Flows (SCF)
– operating activities
– investing activities
– financing activities
• Accounting Policies and Explanatory Notes

BA 2103 – Financial Management| RCDBadoy | CBA-USeP

 Relationships among Financial Statements
• SCI reports all income and expenses
during the period; P/L is the final
figure in the SCI
• SCE considers the P/L figure from
the IS as one of the determining
factors that explains the change in
OE

BA 2103 – Financial Management| RCDBadoy | CBA-USeP

 Relationships among Financial Statements
• SFP reports the ending OE, taken
directly from SCE
• SCF reports net increases and
decreases in cash during the period
and ends with cash balance
reported in the SFP; this statement
is prepared based on both SCI and
SFP

BA 2103 – Financial Management| RCDBadoy | CBA-USeP

BA 2103 – Financial Management| RCDBadoy | CBA-USeP
 Reporting Assignment
Choose your teammates and your topic

Schedule
August 24 – Library Work
August 31 – CBA Graduate School Orientation

BA 2103 – Financial Management| RCDBadoy | CBA-USeP

 Reporting Assignment
• Check rubric and topic contents
• Print one copy of presentation material for the course
facilitator (submit on date of presentation)
• Email soft copy of presentation material within one week from
date of presentation

BA 2103 – Financial Management| RCDBadoy | CBA-USeP