BUSINESS FINANCE: INTRODUCTION TO FINANCIAL MANAGEMENT PART 1

Nararamdaman mo na ba ang graduation? Napakabuti ng Diyos na nakakaraos tayo at hindi natin

namamalayan na malapit na rin ang ating pagtatapos. Last semester mo na sa Senior High School
kaya sulitin na natin!

Parang ang bigat din ng datingan ng subject na Business Finance noh? Oo, ka-level nya kasi ang
accounting at business mathematics, pero very light lang ng slight kasi may amost kalahati naman ay
theories at kalahati naman ay computations. Pero syempre yakang yaka natin yan. Isang taon na nga
tayong naka-quarantine eh, gawin na nating 2 years! Hahaha

Anong unang naisip mo nung narinig mo kahit ang salitang business finance? Parehas ba tayo ng
naisip? Hahhaha Sabi nga ni Jessie J. it’s not about the money, money, money, pero nagkakamali
sya. Tungkol ito sa PERA, at finances ng business. PERA na sana all meron di ba? Hehhehe
Bakit ba importante ang pera? Importante ba? Oo importante ito, kasi minsan di ba, dito nila
sinusukat ang halaga mo. Kapag marami kang pera, mahalaga ka. Kapag wala naman, sakto lang. But
not in all cases, but in most cases. Huhu

Kapag may pera ka, may pambili ka ng needs mo. May panggastos ka para sa mga gusto mo. Mas
komportable ang pamumuhay at less stressful kumbaga. Kapag konti lang ang pera mo, medyo
challenging mabuhay sa mundong ibabaw. Hehe kasi nga limited lang resources mo pero dami mong
needs and wants (oh di ba naipasok ang Economics) So syempre isa sa mga goal natin bilang tao at
ABM student, ay mapalago ang pera natin at mamanage ng maayos ang ating finances. Kaya di ba
niisip natin kung kalian tayo gagastos, ano ang pagkakagastusan natin, saan natin ito iiinvest, o saan
tayo mamumuhunan? That is on a personal side pero wala syang pinagkaiba sa perspective ng
business. Gnayan din ang ating goal sa business na pagmamay-ari natin o minamanage natin. Tayo
bilang financial manager, pag-aaralan natin kung paano mag-eearn ang business ng mas malaking
profit, saan magiinvest o paano pa mapalalago ang kompanya. Sabi ng ani Gitman and Zutter (2012)
Finance can be defined as the art and science of managing money. Oh eh di woow na woow pala.
Hahaha
Finance is the process that includes raising money or resources and allocating them effectively and
efficiently to achieve the firm’s goals and objectives. As financial manager, napakaimportnate ng
cash at iba pang working capital ng business, kasi yung operation ng business ay nakasalalay sa mga
assets na ito. Halimbawa yung cash, di ba yan yung pinambabayad ng mga expenses, pinambabayad
sa suppliers, pinapasweldo sa mga empleyado? Kung wala o kulang yan, ay naku, hindi magiging
smooth ang operations ng business at mahhirapan itong magexpand. Naiiimagine mo ba? Yung mga
empleyado nagrarally, yung mga suppliers magdedemanda, o yung business ay walang kuryente?
Kaya tanggapin natin, importante talaga ang maayos na management ng finances, kaya dyan
pumapasok ang role natin as financial manager. Kumbaga tayo na ang bahala!

Financial Management includes the study of investments, and the study of isntitutions and markets.
Money is needed by the firm to continue its operations, expansion, replacement of new machinery
and equipment, payments, acquisition of new investment, and internal growth. Yan kaya kasama yan
sa mga pag-aaralan natin sa subject na ito. Yung iba’t ibang institutions kug saan pwede tayo mag-
invest, at ang iba’t ibang klase ng investments, so syempre may computation na kasama.
Sabi din nina Cayanan and Borja (2017), “Financial management deals with decisions that are
supposed to maximize the value of shareholders’ wealth.
Sabi sa definition, kailangan natin gumawa ng decisions sa business. So anong klaseng decision?
Ambigat di ba? Sa decision natin nakasalalay ang magiging financial success ng business. Kasi nga
di ba, bawat Negosyo ay may goal o vision, so yung decision natin ay naka-align o sumusuporta sa
goal ng business at isa sa mga goal na ito ay ang kumita, at kumita pa ng malaki! Kaya sa
pagdedesisyon natin, kaialngan natin mag-plan, organize, lead at control. Familiar? Yan yung
functions oof management! Sabi nga Financial management includes planning, organizing,
controlling, and directing to acquire and utilize the funds or resources effectively and efficiently.
Every activity of the finance manager should be according to plan. It should be organized, controlled,
monitored, and evaluated.Pero ang imamanage natin in particular ay ang financial resources ng
business. Napaka-risky ng investments pero syempre kapag calculated mo na ang mga bagay bagay,
liliit at magiging manageable yung risk o yung uncertainty. Parang kumbaga eh, bago tayo sumabak
sa isang laban eh napaghandaan na natin ito, meron na tayong plan B to XYZ, at well-organized ang
lahat. Isa pa sa mga decisions na maari nating maencounter ay ang source of finance, saan ba tayo
kukuha ng funds? An internal source of finance does not increase the debts of the business-like
profit, savings, and sale of unwanted assets while, an external source of finance is provided by people
or institutions outside the business that creates debt and requires payment like loans.
Yan ang overview ng magiging work natin sa future kung plano mong maging financial analyst,
finance manager, bank manager o financial advisor!

BUSINESS FINANCE: INTRODUCTION TO FINANCIAL MANAGEMENT 2 of 3:

CORPORATE ORGANIZATION STRUCTURE
Napag-aralan natin last time yung overview about finance. Sa discussion naito ay pag-aaralan natin
ang corporate organization structure. Sir grabe naman corporate agad?? Baka pwede po simple lang
hehhehe yun nga eh gustuhin ko mang simple lang eh, madali na kasi maintinndihan yun kasi simple
lang hahha kaya doon na tayo agad sa pangmalakasan, saka ito kasi yung nasa module hahaha kapag
naintindihan mo naman na ito, magiging madali na ang lahat. Power!

Ang corporate organization structure ay nagpapakita kung sino-sino at ano ang position ng mga
taong bumubuo sa isang kompanya. Kasama din nito ay makikita natin kung sino ang pinakamataas,
magkapantay sa position at yung mga magkakaugnay na position at trabaho.
Iba-iba ang organization structure bawat kompanya, pero gamitin natin ito bilang halimbawa.

Makikita natin ang shareholders o stockholders. The Shareholders elect the Board of Directors
(BOD). Each share is equal to one voting right. They buy shares to earn a profit in a form of
dividend. Sila yung mga taong bumili ng shares of stocks sa isang corporation. Pag may shares ka sa
isang corporation, maituturing na isa ka na din sa may-ari ng korporasyon na iyon. Kapag kumita ang
isang corporation ay makakatanggap sila ng dividend. (parte sa kita ng korporasyon) Nakadepende sa
laki ng shares mo ang dividend na matatanggap mo.

The Board of Directors is the highest position in a corporation. Some of their responsibilities are
providing direction of the company, setting the policies on investments, approving the company’s
strategies, goals, and budgets, appointing, and removing members of the top management. Ang mga
member naman ng board of directors ay shareholders din ng isang corporation. Pero hinalal o elected
sila ng lahat ng shareholders. Eh sir paano pong sila yung pinakamataas ang position kaysa sa
president? O sa shareholders. Magandang tanong yan. Una mas mataas sila sa mga shareholders kasi
they are part of the decision-making body, unlike kung shareholder ka lang, kumbaga ipinauubaya
(pasok moira) mo na sa directors kung ano ang magiging direction ng companyat ano ang mga
policies na maaaring iimplement. Pangalawa, mas mataas sila sa president kasi, yung president lang
ang mageexecute ng lahat ng policies, strategies at lahat ng nais ipagawa ng mga directors.

Next naman ay ang President.The President supervises the company’s operations and ensures that the
strategies are well executed and planned. He/She also performs all areas of management such as
planning, organizing, staffing, directing, controlling, and evaluating. So tulad nga ng sinabi ko
kanina, ang President ang magsisigurado na ang lahat ng nakaplanong strategies ay maayos at
effective na naiiimplement. Kumbaga sya yung kanang kamay ng lahat ng directors para pamahalaan
ang kompanya. Tulad ng nakikita natin sa illustration, hawak ng President ang mga Vice Presidents
ng company.
Sir bakit po andami ng Vice President? Kasi hinati hati yung mga main functions kung paano nag-
oopearate ang isang business. Tulad ng makikita ninyo may-incharge sa marketing, administration,
production at finance. Kumbaga eh iba iba ng specialization. Pantay pantay sila sa illustration kasi
bawat isa mahalaga.

So ididiscuss natin ang responsibilities ng bawat isa. Ihihighlight din natin ang kaugnayan ng bawat
isa sa finance.
Vice President for Sales and Marketing are formulating business strategies and plans, directing and
coordinating sales, making environmental scanning or research that will allow the company to
increase sales, or identifying new market opportunities, analyzing and assessing the effectiveness and
efficiency of the plans, methods and strategies applied and establishing a good relationship with
customers and distributors
Si VP for marketing ang focus nya ay product development, distribution at promotion ng products at
magbuild ng connection sa mga customers. So paano sya related sa finance? Bawat activity kasi ng
marketing ay binubudgetan. Halimbawa, nagplace ng ads sa isang TV station, so dapat ang goal ay
mabawi o masulit kumbaga ng marketing ang budget na ibinigay sa kanila. Dapat effective ang ad at
magcreate ng mas maraming sales. Yung pricing din ng products ay kasama dito, dapat mabalanse ng
VP of Marketing ang affordability para sa part ng customers, at profitability sa part ng company. Pag
nasa marketing sabi nga dapat creative ka, kasi minsan limited lang ang budget pero ang challenge eh
paano ka gagawa ng marketing campaign na boom talaga .

The Vice President for Administration is responsible for the coordination of the different
departments, providing assistance to the other department by determining the staff needed and
assisting other departments in hiring employees and in payroll preparation.
Si VP for administration naman ang in-charge sa staffing o paghihire ng mga empleyado sa iba’t
ibang departments. Related sya sa finance kasi dapat well-managed ang human resources in terms of
productivity, kung hindi competent at skilled ang mga employee, gastos yun para sa kompanya.
Kasama o pasok din dito ang sweldo ng mga employee. Dpat minamanage ang overtime kasi
magbabayad ang kompanya ng overtime pay at iba pang payroll concerns.

The Vice President for Production makes sure that the production meets the demand, finds ways to
minimize cost in producing a competitive quality product, maximizes the utilization of the
production facilities and solves production issues.
Si VP for Production naman ang in-charge sa paggawa ng mga produkto. Dapat masigurado na
quality ang lahat ng products kasi kapag hindi, bababa ang sales. Dapat din na maensure na yung raw
materials ay nagagamit ng maayos at walang nasasayang kasi magigin expense ito ng kompanya.
Oh di ba lahat sila related ay Finance. Ngayon alamin natin ang responsibilities ni Vice President for
Finance.

The Vice President for Finance makes decisions including planning, acquiring and utilization of
funds. The functions of the Finance Manager are investing decisions, financing decisions, operating
decisions, and declaring dividends.
Investing decisions deals with managing the assets of the firms. Some of the examples of investment
decisions are the allocation of funds, determination of the funds that a firm can put into investment,
evaluation, and selection of capital investment proposal.
So para mapalago ang assets ng company, nagdedecide ung magkano ang ilalaan for investment,
saang firm magiinvest at ano ang investment na may mmagandang return para sa business.

Financing decisions includes making decisions on how to finance the long-term investments
(expansions or acquisition of new land) and working capital which deals with the day-to-day
operations of the company (payment of rent and utilities, purchase of raw materials). The finance
manager must determine the right capital structure of the company. Capital structure refers to how
much the total asset is financed by the debt (like loans) or equity (like stocks or bonds).
Sa financing decision naman ay inaalam ng VP for Finance kung saan magsource out ng funds.
Kasama dn dito yung decisions sa pagpurchase ng mga non-curent assets tulad ng land, ewuipment,
vehicle,at machines. Ito kasi ay maituturing na long-term investments. Medyo mahal per Matagal
magagamit at mapapakinabangan ng company.

Operating decisions deals with working capital management. Working capital refers to short-term
assets and short-term liabilities. Inventory, receivables, cash, and short-term investments are
examples of shortterm assets. Accounts payable and short-term investments are examples of short-
term liabilities. Working capital management helps the firm to ensure that the firm has sufficient
resources to finance the day-to-day operations but, if the management is aggressive, they will take
the risk to use either long-term or short-term sources or even the combination of the sources.

Sa operating decisions dito pumapasok yung management ng current assets at current liabilities. Ito
kasing mga short term accounts na ito ay ang mga oinakamadaling maliquidate at mag mature.
Ginagamit di ito primarily sa operations ng business.
Declaration of dividends refers to the determination of how much dividends are to be distributed to
the shareholders, frequency of payments and amounts to be retained by the firm. Dividend is a
portion of profit or payment made by a corporation to its shareholders. o There are certain conditions
before a company can declare dividends: (1) The company must have enough retained earnings
(accumulated profits) to support cash dividend declaration. (2) They must have enough cash.

Di ba yung profit paghahatihatian ng shareholders? Kung mmagkano ang irerelease ay nakadepende

sa VP for Finance. Dapat masigurado nya na may sapat na retained earnings o yung naipon na profit
para irelease sa mga stockholders at dapat may cash ang business.
Both the treasurer and the controller report to the Vice President for Finance. The treasurer is
responsible in managing the cash and credit, financial planning and capital expenditures. The
controller handles tax payments, financial accounting and management information systems.
Napakasolid talaga ng Finance. Parang mga nanay natin, magagaling mag budget! So iyan ang ibat
ibang positions sa company. Bawat isa ay nakakaapekto sa financial condition ng isang business
mula sa pinakamataas hanggang sa pinakamababa.
Someday isa ka na dyan. Ikaw na ang CFO o Chief Financial Officer ng business mo!

BUSINESS FINANCE: INTRODUCTION TO FINANCIAL MANAGEMENT: ROLE OF

FINANCIAL MANAGER Part 3 of 3 (Explained in Taglish)
According to Cabrera (2017), “In striving to maximize owners’ or shareholders’ wealth, the financial
manager makes decisions involving planning, acquiring, and utilizing funds which involve a set of
risk-return trade-offs.” Those risks or returns would have an impact on the market value of the firm
that will lead to the shareholder’s wealth maximization or downfall of the firm if no proper decisions
were made, but some of the factors that affect the market’s price of the firm’s shares are beyond the
control of the management. Thus, it is the responsibility of the financial manager to make decisions
in allocating the funds or resources properly, finding the best alternatives for funding the company,
and creating a policy in distributing the dividends of the investors in line with the organization’s
objectives.
Aminin man natin o hindi isa sa mga main objective kung bakit tayo nag business bukod sa mga
personal nating reasons na pang Miss Universe ay para mag-earn ng profit. Kasi naman kung walang
profit paano masusustain ang operation ng isang business? Kaya bilang isang financial manager, we
must effectively and efficiently apply proper management superpowers natin. Dapat maanticipate
natin ang mga risks na maaring maencounter ng business financially. Dapat mala-Rudy Balwin ang
level of anticipation natin hehe with those risks expected dapat ay may mga strategies din tayo paano
ito maoovercome. Yung financial health ng isang kompanya ay nakasalalay sa financial manager na
kagaya mo! As financial manager para tayong magsasaka, tanim tayo ng tanim sa mga investment
institutions, sa pagexpand ng business at financial markets and yung goal natin ay anihin ang lahat ng
pera, salapi, kayamanan at money money money para sa business natin. Kaya ba? Fighting!

Isang magandang halimbawa nito ay ang ABS-CBN Corporation. Alam naman natin na sila ang
leading media network dito sa bansa. Diversified sila from, news, music, films, magazines,
merchandise, concerts and events, at marami pang iba. Last year na-deny sila ng franchise na naging
reason kung bakit bumaba yung value ng stocks nila. Marami rin silang deparments na nag-close
talaga. Pero in not less than 1 year, nakabuld sila ng strategies on how to still do business. They
entered into different partnerships and created different platforms para makapagserve pa din sa mga
loyal Kapamilyas. Hindi lang sa financial managers ang credit ng success pa din ng ABS-CBN
ngayon kundi sa leadership ng President at ng lahat ng bumubuo sa kompanya.

Bilang isang financial manager, yaka mo din yan, sabi nga sa mga taglines, always find ways, para
ang company ay in good hands!