Business Finance

Professor Normina Angela Aglibut

Objectives
• Define finance
• Identify the different areas of finance
• Discuss finance in a business organization
• Describe the functions of a finance officer
• State the qualifications of a finance officer
FINANCE
is both a science and an art of correct application of economic and
accounting concept and principles that define the system,structure
and process of management, allocation and utilization of financial
resources, investments and expenditures.
Both a science and an art
• Financial facts and truth are based on financial statements that
presents relevant, factual and true information about financial
performance of a business.

• New developments and trends continue to evolve in the future,

Financial services, practices and business operation adapt to the
changes.
Application of economic and accounting
concept and principles
• Economics is a social science concerned with the efficient utilization
od scare resources to satisfy human needs and wants.

• Accounting is an art of recording business transaction and deals with

the preparation of financial statements.
System, Structure and Process
• It is the various financial activities of the business organization. Every
financial activity has a purpose.
Management, Allocation and Utilization
• Management implies of handling efficient handling of business
resources.
• Allocation connotes wise distribution of financial resources to the
different functional areas.
• Proper assignment of funds between current and non current assets
and correct sourcing of funds based on the concepts of risk and
return.
Financial resources, Investments and
Expenditures
Financial Resources - refer to the fund of a business which are
provided by the owner or by the creditors.

Financial Investments – resources that are expected to provide income

and achieve appreciation or growth of the business.

Financial Expenditures- of a business may cover the operating

expenditures and the capital expenditures.
AREAS OF Finance
FINANCE
Private Public
Finance Finance

Personal Business
Finance Finance

Financial Capital Financial

management Market Investments
Private Finance
• Is the management of financial resources of private individuals, non
governmental organizations, and private organizations in accordance
with the prescribed financial policy and priority of the person or
business organizations.
 Public
Finance
• Is the allocation of
government income
generated from either
taxation or borrowings
and the government
expenditure based on
the approved national
and local appropriation
or budget.
AREAS OF Finance
FINANCE
Private Public
Finance Finance

Personal Business
Finance Finance

Financial Capital Financial

management Market Investments
Personal Finance
• Directed towards the
management of personal
resources of an individual.
Income sources:
Compensation
Exercise of Profession
Business Income
• Allocation based on
individual’s personal need
such as:
Household expenses
Education
Hospitalization
Acquisition of personal and real
properties.
Business Finance
Is an area of finance that focused on the handling and management of
financial resources of a business organization.
3 Major Divisions of Business
Finance
• Financial Management – focuses on capital budgeting decision or
investment decision on the acquisition of assets.

• Capital Market – studies financial institutions and their functions that

provide assistance to both private and public borrowers of funds.

• Financial Investment-Include business decisions about the value and

price of stocks, bonds, portfolio analysis, security analysis and
behavior of the investors.
Four Functional Divisions are involved:
• Marketing
• Production and Operation Division
• General Administrative or Human Resource Division
• Finance Division
 Board of Directors

CEO/President

VP for Administration/HR
VP for Sales & Marketing VP for Finance VP for Production
Division

Acctg Dept (Chief

Accountant,Controller,or finance
officer)

Finance or Treasury
Department
(Treasurer or Finance
Officer)

Finance in Business Organization

 Board of
CEO/President
Directors

Operating Finance
Division (COO) Division (CFO)

Production and
Accounting
Operations

Human
Treasury
Resources

Marketing
Finance in Business Organization