UNIVERSIDAD DE MANILA

Republic of the Philippines

City of Manila

FINANCIAL MGT. (FINANCIAL ANALYSIS FOR DECISION

MAKING) WRITTEN REPORT

INTRODUCTION TO FINANCIAL MANAGEMENT

BEN 31 | GROUP 6

MEMBERS:
Brillantes, Justin E.
Dimaala, Aaliyah Marie L.
Galbis, Pearl Regina T.
Inosante, Margaret Anne E.
Maglente, Charliemange
Palacio, Jeremie
Soliman, Jazriel Heart L.

PROFESSOR:
Mrs. Mary Grace Daguiso
REPORTER: INOSANTE, MARGARET ANNE E.

WHAT IS FINANCE

- The art and science of managing money and it is also

called as lifeblood of business organizations.

Finance As a Science - Finance, as a field of study and

an area of business, definitely has strong roots in
related-scientific areas, such as statistics and

mathematics. Furthermore, many modern financial

theories resemble scientific or mathematical

formulas.

Finance As an Art - Still, while these and other

academic advancements have greatly improved the
day-to-day operations of the financial markets,
history is rife with examples that seem to contradict
the notion that finance behaves according to rational
scientific laws.

- It can be also referred as the

provision of money at the time when
it is needed.

- Finance is a term for matters

 regarding the management, creation,
and study of money and investments.
It involves the use of credit and debt,
securities, and investment to finance
current projects using future income
flows. Because of this temporal
aspect, finance is closely linked to the
time value of money, interest rates,
and other related topics.
History of Finance

Finance, as a study of theory and practice distinct from the field of economics, arose in the
1940s and 1950s with the works of Harry Markowitz, William F. Sharpe, Fischer Black, and
Myron Scholes, to name just a few.

Particular realms of finance—such as banking, lending, and investing, of course, money itself—
have been around since the dawn of civilization in some form or another.

The financial transactions of the early Sumerians were formalized in the Babylonian Code of
Hammurabi (circa 1800 BC). This set of rules regulated ownership or rental of land, employment
of agricultural labor, and credit.

Yes, there were loans back then, and yes, interest was charged on them—rates varied
depending on whether you were borrowing grain or silver.

The financial transactions of the early Sumerians were formalized in the Babylonian Code of
Hammurabi (circa 1800 BC). This set of rules regulated ownership or rental of land, employment
of agricultural labor, and credit.

Yes, there were loans back then, and yes, interest was charged on them—rates varied
depending on whether you were borrowing grain or silver.
https://www.investopedia.com/terms/f/finance.asp
IMPORTANCE OF FINANCE

Main Importance

Business finance is the process of managing an

organization’s money. The purpose of business finance is
also to ensure that a business has adequate operating
funds and that it is spending and investing its money
carefully, wisely, and effectively.

The ability to ensure that a business operates without any

financial hiccups like running short of cash, and at same
time making sure, that the funds are secure and well
invested for long-term gains. (Nordqvist, 2020)

Moreover, even though finance is dependent on

accounting, Finance is more active while accounting is more descriptive; therefore, you can use
accounting data to manifest perceptible results.

We all know that all businesses run on money, and business finance is there to help you make
smart and wise financial decisions concerning long-term funding strategies as well as cash flow.
By learning more about business finance, using the money you have in your business, and how
to get even more capital when you need it, the
profitability of your organization will improve, and
you will increase the potential to leverage more
opportunities.

Some of the reasons why finance is important in

business are as follows;

Creating Profit for the business - As people often say,

“you need money to make money,” and they are ab
solutely right, that is why business finance needs to be
given the most attention. It is imperative for the profits
coming into a business to keep increasing to ensure that
the business continues to run successfully.

Therefore, the starting capital investment needs to be

managed diligently, taking note of the narrow division
between debt and equity financing. As the finance team
does the profit planning, they should take it as they are
determining the profit of individual services and
products of the business and, at the same time,
eliminating the losers while endorsing the winners.
Exploring new products and markets - All businesses are constantly in
pursuit of new products and markets, and this, of course, financial muscle.
Therefore, without an effective financial structure in place, exploring new
spaces and getting into different markets with fresh solutions or products
may be rather difficult. This also includes new tools that can help you
achieve more with your business.

Creating more assets for the business - Ultimately, all company

owners’ long-term goal is to improve production by attaining more
assets for the business. The business finance department assists the
company in making sure that they have viable savings plan
independent of short-term finances in order to meet this goal.

An organization requires a very skilled financial management team to

adequately invest in items such as equipment, land, and machinery
that will enhance the production scale.

One of the main options that an organization should consider offering is the availability to make
online payments. To improve the purchase of goods or services via the internet, businesses
need to consider e-commerce payment services.

Making sure operational expenses are met - In most companies, the

Finance side of things involves operational costs like raw material,
interest payments, remunerative packages for employees, inventory,
and so on; and meeting these expenses is what usually keeps the
organization going. A good financial plan will make sure that there is
stability in the management of the profits coming in relative to the
operational expenses to be met on a regular basis.

Managing inevitable risks - Entrepreneurs, as well as established business owners, know very
well that running a business is all about taking risks. However,
not all risks will result in success, failure will come, and
challenges are unavoidable. Therefore, having financial
management skills will be very beneficial in developing a
contingency plan before that time comes.

Managing the cash flow of a business - No matter the size of

a
business, the larger the amount of cash flowing in and out of
business the better. However, not having a good financial
system can cause a lot of problems, including some legal
issues.

Any business requires a solid financial team to deal with the company’s cash flow, with financial
records as evidence of the different transactions. This is important so that the company can
cover
all its business expenses, and thus avoid any future problems. Knowing what your cash burn
rate is, and how to calculate it, is vital for a growing business.

It is important to obtain because of the

following advantages:

- Business finance can help

entrepreneurs purchase land, capital
assets and other assets without
much difficulty and can focus solely
on commencing the operations of
the business.

- With access to finance, purchasing

land and machinery, upgrading to the
latest software and technology is
easier, allowing you to walk towards
ensuring the highest standards of
quality in your industry.

- Access to finance can help you deal

with contingencies better without
disrupting the operations of the
company.
https://www.fullertonindia.com/knowledge-center/business-finance.aspx

https://marketbusinessnews.com/importance-finance
business/233157/#:~:text=The%20importance%20of%20finance%20in%20business%20is
%20in %20the%20ability,invested%20for%20long%2Dterm%20gains.
FUNCTIONS OF FINANCE
❖ The purpose of finance is to help individuals, businesses, and the government save, manage,
raise, and efficiently use the money to the best of its ability. Without the proper management
and utilization of monetary resources, the foundation of any entity or organization is doomed

to unhinge. Therefore, a dedicated finance system is mandatory for any organization to

optimize its goals.

Take the example of a typical business organization. They may have various departments like
finance, H.R., accounting, sales, marketing, development, or investments, and maybe a few
other fields like administrative and customer service. Of all these different departments,
finance may be the most important in that it works to ensure money is used efficiently and the
best financial products are a part of the business plan. For example, suppose the sales team is
 working tirelessly to increase revenue.

But the finance department does not make sure that the company is sticking to its budget or is
investing the money into the proper departments or assets. The whole venture, therefore, has
effectively become for nothing. And this will soon lead to chaos in the business functioning.

On a national level, the lack of proper financial insight can lead an economy to a crisis, thus
affecting the livelihood of its citizens. The awareness of overseeing and protecting public
finance has, therefore, increased in the last decade among countries.

https://www.wallstreetmojo.com/finance/

❖ The purpose of finance is to help people save, manage, and raise money. Finance needs to have
its purpose enunciated and accepted. Students in finance should learn it in their business
education. Perhaps the purpose should be taught even earlier at the elementary education
level. Practitioners should be comfortable with the purpose of finance, knowing it implicitly
and speaking it unabashedly. This acceptance and acknowledgement is a first step towards
improving the culture of finance.

https://sevenpillarsinstitute.org/mission/the-purpose-of-finance/

❖ Finance allows for the more efficient allocation of capital resources. Finance involves borrowing
& lending, investing, raising capital, and selling & trading securities. The purpose of these
pursuits is to allow companies and individuals to fund certain activities or projects today, to be
repaid in the future based on income streams generated from those activities. Without finance,
people would not be able to afford to buy homes (entirely in cash), and companies would not
be able to grow and expand as they can today.

https://www.investopedia.com/terms/f/finance.asp
REPORTER: BRILLANTES, JUSTIN E.

Definition of Financial Management

Meaning of financial management: Financial management is that activity which is concerned

with the planning and controlling of the firm's financial resources.

Financial management is the business function concerned with profitability, expenses, cash and
credit, so that the "organization may have the means to carry out its objective as satisfactorily
as possible;" the latter often defined as maximizing the value of the firm for stockholders.
• The term financial management has been defined by Solomon, “It is concerned with the
efficient use of an important economic resource namely, capital funds”.
• The most popular and acceptable definition of financial Management as given by S.C.
Kuchal is that “Financial. Management deals with procurement of funds and their
 effective utilization in the business”
• Howard and Upton: Financial management “as an application of general managerial
principles to the area of financial decision-making.
• Weston and Brigham: Financial management "is an area of financial decision-making,
harmonizing individual motives and enterprise goals"
• Joshep and Massie: Financial management "is the operational activity of a business that
is responsible for obtaining and effectively utilizing the funds necessary for efficient
operations.
• Thus, Financial Management is mainly concerned with the effective funds management
in the business. In simple words, Financial Management as practiced by business firms
can be called as Corporation Finance or Business Finance.

Scope of Financial Management

Financial management helps a particular organization to utilize their finances most profitably.
This is achieved via the following two conducts.

The scope of financial management is divided into two categories:

• Traditional Approach

• Modern Approach

Let us discuss the two approaches in brief.

Traditional Approach According to this approach, the scope of financial function is restricted to
procurement of funds by the corporate organizations to meet their financial needs.

The term procurement here refers to raising of funds externally as well as the interdependent
aspects of raising funds.

Following Three Things are used for the Procurement of Finance

• Institutional source of finance

• Issuance of financial instruments to collect necessary funds from the capital market. •

Legal and accounting relationship between the business and the source of finance.

According to this approach, finance is not required for the routine events but for the sporadic
events like promotion, reorganization, liquidation, expansion, etc. Managing funds for these
things is considered as the most important feature of financial management. The financial
manager in this approach is not concerned with internal financing rather he has to maintain
relationships with outside parties and financial institutions.

According to this approach, the financial manager is not responsible for the efficient use of
funds whereas he is responsible to get necessary funds on fair terms from the outside parties.
The traditional approach continued till the fifth decade of the 20th century.

What are the Limitation of Traditional Approach

The traditional approach of finance can be considered somewhat narrow because of several
reasons. Following are the primary drawbacks and this approach.

One-sided Approach

This traditional approach gives more attention to the system of procurement and the problems
that might arise during that scenario. It does not offer a system for efficient utilization of
procured funds. This approach considers the viewpoint of outside parties (like banks, financial
institutions, investors) who provide funds to the business but ignores the internal parties who
are responsible to take financing decisions. Therefore, a one-sided approach is also termed as
an outsider-looking approach.

More Focus on the Financial Issues of Corporate Enterprise:

This approach focuses only on the financial problem of corporate enterprises but the financial
problems of non-corporate entities like partnership firms, and sole trade are ignored.
More Emphasis on Sporadic Events:

Traditional approach considers fund allocation as on the contingencies for sporadic incidents
like business reorganization, incorporations, mergers, consolidation, etc. ignoring This approach
ignores everyday financial problems that a business enterprise might face. Working capital
financing decisions are also kept outside the scope of a traditional approach.

Modern Approach

By the end of the 1950 technology up-gradation, development of strong corporate structure
and increasing competition made it necessary for the management to make optimum use of
available natural resources.

According to this approach, the financial manager considers the broader and analytical point of
view. According to the modern approach, financial management is concerned with both
acquisition of funds and optimum use of available resources. The arrangement of funds is an
important component of the whole finance function.

In this approach, not only sporadic events are considered but also the long term and short term
financial problems are considered. The main components of financial management include
financial planning, evaluation of alternative use of funds, capital budgeting, determination of
cost of capital, determination of the financial standard for the success of the business,
management of income, etc. Therefore, according to this approach, three important decisions
are taken by the finance manager. The three decisions are:

• Investment Decision

• Financing Decision

• Dividend Decision

Let us discuss the three decisions in brief.

Investment Decision

This decision is related to the selection of assets in which finds will be invested by the firms. The
asset that is acquired by a firm may be a long term asset or short term asset.

The decision taken to invest the funds in long term assets is known as capital budgeting
decision. Hence, capital budgeting is the process of selecting assets or an investment proposal
that yields return for a long term. The decision taken to invest the funds in short term assets or
current assets is known as working capital management. The working capital management
deals with the management of current assets that are highly liquid in nature.

Financing Decision

This scope of financial management indicates the possible sources of raising finances from
various resources. They are of 2 different types – Financial planning decisions attempt to
estimate the sources and possible application of accumulated funds. A proper financial planning
decision is crucial to ensure the availability of funds whenever required. Capital structure
decisions involve identifying various sources of funds. It facilitates the selection of the best
external sources for short or long-term financial requirements. The financing decision is related
to the procurement of funds required at the right time. After the decision related to the fund
requirement is made then the financial manager has to select the various options for financing
and select the best and cost effective method for financing so that the business runs smoothly
without any unnecessary obstacles such as inadequate funds.

Dividend Decision

It involves decisions taken with regards to net profit distribution. It is divided into two
categories –

• Dividend for the shareholders.

• Retained profits (usually depends on a particular company’s expansion and

diversification plans).

The dividend decision is concerned with determining the percentage of profit earned to be paid
to the shareholders as dividend. Here the financial manager makes the decision regarding how
much dividend is to be paid out or how much to retain as retained earnings. Dividend payout
decisions are critical to make so that shareholders and investors are happy and even the firm
has enough funds for the business expansion.

References:

https://www.slideshare.net/KasamsettySailatha/financial-management-module1

https://www.vedantu.com/commerce/scope-of-financial-management

REPORTER: DIMAALA, AALIYAH MARIE, L.

OBJECTIVES OF FINANCIAL MANAGEMENT

1. PROFIT MAXIMATION
- The main objective of financial management is to increase profit over the long and
short terms. Even the maximization of income is covered, where each shareholder's
value or hold on profits should increase. The better a business performs, the higher the
market value of its shares will be since these outcomes are related to business
performance.
2. IMPROVED EFFICIENCY
- Proper distribution is also encouraged by proper financial management. Mobilization
and use of finances lead to better business decisions, from building inventories to
investing in profitable businesses. This enables managers to distribute the money and
 distribute them around departments, improving an organization's overall efficiency. 3.
BUSINESS SURVIVAL
- Maintaining an organization's survival is the main objective of financial management.
The best way for businesses to survive a competitive market, as the word means, is to
effectively manage their financial resources. Big decisions need to be made by managers
after research. If needed, they may communicate with outside individuals or
organizations. Every choice matters because it affects the business.
4. BALANCED STRUCTURE
- The balance of different sources of capital is created as financial managers prepare
the capital structure. For stability, flexibility, and liquidity, this balance is necessary. This
also determines the proportion of owned capital to borrowed capital.

FUNCTIONS OF FINANCIAL MANAGEMENT

Estimation of capital requirements: A finance manager has to make estimation with regards to
capital requirements of the company. This will depend upon expected costs and profits and
future programmes and policies of a concern. Estimations have to be made in an adequate
manner which increases earning capacity of enterprise.
Determination of capital composition: Once the estimation have been made, the capital
structure have to be decided. This involves short- term and long- term debt equity analysis. This
will depend upon the proportion of equity capital a company is possessing and additional funds
which have to be raised from outside parties.
Choice of sources of funds: For additional funds to be procured, a company has many choices
like- Issue of shares and debentures Loans to be taken from banks and financial institutions
Public deposits to be drawn like in form of bonds. Choice of factor will depend on relative
merits and demerits of each source and period of financing.
Investment of funds: The finance manager has to decide to allocate funds into profitable
ventures so that there is safety on investment and regular returns is possible.
Disposal of surplus: The net profits decision have to be made by the finance manager. This can
be done in two ways:
Dividend declaration - It includes identifying the rate of dividends and other benefits like
bonus.
Retained profits - The volume has to be decided which will depend upon expansional,
innovational, diversification plans of the company.
Management of cash: Finance manager has to make decisions with regards to cash
management.
Financial controls: The finance manager has not only to plan, procure and utilize the funds but
he also has to exercise control over finances. This can be done through many techniques like
ratio analysis, financial forecasting, cost and profit control, etc.
REPORTER: GALBIS, PEARL REGINA T.
 Introduction to Financial Management
TOPIC: “Role of Finance Manager/ Important skills of finance manager”

What role of finance manager?

A Finance Manager distributes the financial resources of a company, is responsible for the
budget planning, and supports the executive management team by offering insights and
financial advice that will allow them to make the best business decisions for the company.

Financial managers generally oversee the financial health of an organization and help ensure its
continued viability. They supervise important functions, such as monitoring cash flow,
determining profitability, managing expenses and producing accurate financial information.
Also, a typical Finance Manager job description should include,
• Collecting, interpreting, and reviewing financial information

• Predicting future financial trends

 • Reporting to management and stakeholders, and providing advice how the company
and future business decisions might be impacted
• Producing financial reports related to budgets, account payables, account receivables,
expenses etc.
• Developing long-term business plans based on these reports

• Reviewing, monitoring, and managing budgets

• Developing strategies that work to minimize financial risk

• Analyzing market trends and competitors

What skills and qualifications should a Finance Manager have?

A degree in the following fields will prove particularly advantageous:
• Accountancy or Finance

• Economics

• Mathematics

• Business Studies

• Management

• Postgraduate degrees in financial management would also be beneficial for candidates

looking to advance their career.

As well as formal qualifications, a Finance Manager job description should detail the following
qualities:
• An analytical mind

• Negotiation skills and the ability to develop strong working relationships •

Commercial and business awareness

• Good communication skills – both written and verbal

• A keen eye for detail and desire to probe further into data

• Ability to stick to time constraints

Important skills of finance manager:
Being a financial manager nowadays involves much more than monitoring a company’s cash
flow as the industry continues to evolve largely due to the emergence of new technology.
Finance managers are accounting professionals who are responsible for the financial wellbeing
of a company or organization. Finance managers may advise upper management or corporate
officers to determine how and where the company's assets are acquired and allocated. Finance
managers create detailed financial reports and statements using a wide array of skills.

What are finance manager skills?

Finance manager skills are those that help individuals in this role oversee all aspects of a
company's financial transactions, including budget analysis and calculation of return on
investment (ROI) as well as purchasing and staffing decisions. Finance managers provide
accurate data analysis and strategic propositions to create profit and reduce loss. A finance
manager's skills are built from a wide array of roles and responsibilities.

Examples of finance manager skills

Finance managers amass many skills throughout their education, experience, and day-to-day
responsibilities. Successful finance managers are adept at several of the following skills.

Leadership
Finance managers work with individuals or as part of a team and generally bring a strong
foundation of leading finance teams. Effective leaders demonstrate the ability to direct others
and delegate tasks. Good financial managers take charge of situations and form effective
solutions to encourage trust in their leadership skills.

Communication
Since not every person in a company understands complex financial data or documents,
effective finance managers must have strong written and verbal communication skills.
Finance
managers are able to explain complicated formulas or analysis to present information in an
accessible manner.
Mathematical proficiency
Finance managers work with large sums of money and rely on advanced mathematical abilities
to compile and analyze data. Proficient finance managers are well versed in algebraic
mathematics and have the ability to understand and create formulas. Effective finance
managers are knowledgeable of international finance and can decipher a large variety of
financial documents.

Problem solving
Whether it is analyzing a budget or calculating the risks of an investment, finance managers are
adept at taking action and finding solutions. Managers have a deep understanding of the
company's financial goals and find effective ways to meet those goals without jeopardizing the
business.

Analysis
As part of the decision-making process, finance managers demonstrate logical thinking.
Effective managers are able to look at all options in order to present a comprehensive,
understandable analysis. Finance managers use analytical skills when writing contracts, creating
budgets and forecasting profit and loss.
REPORTER: MAGLENTE, CHARLIEMANGE

Corporate Organizational Chart of Financial Management

The most common organizational structure in business is a hierarchy of functional departments
and units through which work flows in order to achieve maximum performance. Its alignment
enables employees within functional groups to work together to perform individual tasks and
meet overarching objectives.
Finance department organizational chart and duties expand even farther as the company
reaches full maturity. A highly evolved finance department often adopts a divisional
organizational structure characterized by a complex, double hierarchy. For example, in a
divisional organizational structure, sub-departments function as independent units, each one
having executive and mid-level management layers. A chief financial officer heads the finance
department, and groups of related accounting activities fall under the authority of executives
such as the company treasurer, deputy financial office and controller. Although each division is
accountable to the CFO, it functions on its own
The chief financial officer often distributes the financial management responsibilities between
the controller and the treasurer. The controller normally has responsibility for all accounting
related activities. These include such functions as
• Financial Accounting This function involves the preparation of the financial statements
for the firm, such as the balance sheet, income statement, and the statement of cash
flows.
• Cost Accounting This department often has responsibility for preparing the firm’s
operating budgets and monitoring the performance of the departments and divisions
within the firm.
• TaxesThis unit prepares the reports that the company must file with the various
government (local, state, and federal) agencies.
• Data Processing Given its responsibilities involving corporate accounting and payroll
activities, the controller may also have management responsibility for the company’s
data -processing operations.
 • The treasurer is normally concerned with the acquisition, custody, and expenditure of
funds. These duties often include
• Cash and Marketable Securities Management This group monitors the firm’s short -
term finances forecasting its cash needs, obtaining funds from bankers and other
sources when needed, and investing any excess funds in short-term interest -earning
securities.
• Capital Budgeting Analysis This department is responsible for analyzing capital
expenditures that is, the purchase of long -term assets, such as new facilities and
equipment.
• Financial Planning This department is responsible for analyzing the alternative sources
of long-term funds, such as the issuance of bonds or common stock, that the firm will
need to maintain and expand its operations.
• Credit AnalysisMost companies have a department that is responsible for determining
the amount of credit that the firm will extend to each of its customers. Although this
group is responsible for performing financial analysis, it may sometimes be located in
the marketing area of the firm because of its close relationship to sales.
• Investor Relations Many large companies have a unit responsible for working with
institutional investors (for example, mutual funds), bond rating agencies, stockholders,
and the general financial community.
• Pension Fund Management The treasurer may also have responsibility for the
investment of employee pension fund contributions. The investment analysis and
portfolio management functions may be performed either within the firm or through
outside investment advisors.
It should be emphasized that the specific functions of the controller and treasurer shown in
Figure are illustrative only and that the actual functions performed vary from company to
company. For example, in some companies, the treasurer may have responsibility for tax
matters. Also, the board of directors of the company may establish a finance committee,
consisting of a number of directors and officers of the firm with substantial financial expertise,
to make recommendations on broad financial policy issues.
REFERENCE:
https://www.wisdomjobs.com/e-university/financial-management-tutorial-289/organization
of-the-financial-management-function-6315.html
https://smallbusiness.chron.com/organizational-structure-procurement-80623.html
REPORTER: SOLIMAN, JAZRIEL HEART L.

FUNCTIONS OF CONTROLLER AND TREASURER

In terms of managing finances, businesses can count on controllers and treasurers. However,
though they may seem similar, they serve distinct purposes. Financial controllers head the
accounting department, in a way, since they supervise the accountants and manage the books
of the company. They make sure that the financial reports are done in a timely and proper
manner for the management’s review.

Treasurers, on the other hand, are essentially financial advisors to their management. They look
into the economic atmosphere of the industry and advise management on the proper way to
handle possible economic changes.

WHAT IS CONTROLLER?
A controller is in charge of the company’s accountants.
They
are the highest in the food chain, as far as accounting goes.
A financial controller is in charge of supervising the
preparation of financial reports and presenting them to
management. In some governmental organizations, a
controller is also known as a financial comptroller.
A controller reports to the chief financial officer (if the
company has one), formulates policies for the company and
oversees the audit, budget and accounting departments in
their company.

FUNCTIONS OF CONTROLLER:

1. PLANNING FOR CONTROL, The controller prepares budget and consider expectations
regarding future outcomes of different courses of actions of the company. 2. REPORTING
& INTERPRETING, Controller recapitulate financial data and present it to the different
levels of management.
3. EVALUATION & CONSULTING, The controller assesses financial data and administer
advice to management in making decisions.
4. TAX ADMINISTRATION, The controller monitors the formulation and implementation of
tax policies and deliberate its implications to tax-related decisions.
5. GOVERNMENT REPORTING, Controller prepares and set financial statements according
to the accounting standards.
6. PROTECTION OF ASSETS, The controller implements internal controls to guard company
assets against fraud, natural disasters, etc.
7. ECONOMIC APPRAISAL, Controller evaluate the influence of economic, social and
government to the business.

The primary responsibility of the financial controller is producing and presenting timely reports.
These reports form the basis of the management’s decisions and economic predictions. They
are also tasked with explaining to the management what the various items of the financial
statements mean and, in some ways, offering advice following the reports that they present.

Controllers are also responsible for the company’s compliance with the law regarding taxes and
other financial matters. They will be the ones who are directly presenting compliance
documents and filing tax returns.

Qualifications of Controller
For the financial controller position, you must obtain a degree in Accounting,
Finance, Economics, or Business. Aside from the degree, you are also required
to be a licensed CPA with a background in accounting jobs since you will be
handling financial reports and internal finance functions.

WHAT IS THE ROLE OF A TREASURER?

While the controller is in charge of the accounting
department, the treasurer oversees the finance
department. In some companies, controllers can be
referred
to as the vice president of finance. Their main responsibility
is to help their company grow its funds and invest the
money they have wisely.

The treasurer is the person who helps the company grow

its
revenue. He or she builds and nurtures relationships with
banks and investment companies so that they know where
the best place is to invest the company’s money.

FUNCTIONS OF TREASURER:

1. PROVISION OF CAPITAL, The treasurer is responsible in obtaining loans and other forms
of credit from outside sources.
2. INVESTOR RELATIONS, Treasurer are interacting and negotiating with shareholders,
bankers, current and potential investors.
3. SHORT-TERM FINANCING, The treasurer manages and handling the cash flow of the
business.
4. BANKING & CUSTODY, Treasurer keep the bankers of the company updated to the
company's financial condition, projections as well as its possible needing of borrowed
funds.
5. CREDITS & COLLECTIONS, The treasurer oversees the extension of credits to customer.
6. INVESTMENTS, Treasurer analyze investment prospects to maximize and boost the use
of company's unused cash and assets.
7. INSURANCE, Treasurer uses various hedging strategies in order to reduce risk related to
changes and adjustments in the value of company assets, interest rates, etc.

Because treasurers are involved in growing the company’s investments, they will manage
relationships with shareholders. They do this by effectively communicating the company’s goals
and plans for achieving its fiscal targets.

The treasurer, being the person best suited to explain the company’s financial position, is
tasked with communicating with potential and current investors. It is up to the treasurer to
explain how the company is doing financially and how it plans to remain profitable and
beneficial to its investment.
The treasurer ensures that the company’s resources are invested in the most profitable
ventures by forming and maintaining healthy relationships with investment banks.

Qualifications of Treasurer
The ideal candidate for the treasury role is a graduate of Accounting, Finance,
Economics or Business degree. An intensive grasp of business segments and
communication skills to interact with management and stakeholders are also a
must.

CONCLUSION
Controllers focus on the internal workings of organizations. They prepare
budgets and supervise accounting and auditing work. They also generate the
tax returns and financial statements required by regulators. Controllers
monitor whether operational units are meeting deadlines and complying
with regulations.

Treasurers obtain loans and other credit from outside sources, maintain
relationships with banks, raise equity capital, invest company funds and
communicate with shareholders. In general, they manage the company's
cash and ensure that the company meets the financial goals expressed in
the budget.
REFERENCES:
https://nuvest.net/treasurer-vs-controller-whats
difference/#:~:text=The%20controller%20is%20more%20involved,the%20best%20interest
%20f or%20loans

https://work.chron.com/contrast-roles-treasurers-controllers-25715.html

https://www.dvphilippines.com/drawing-the-difference-between-a-controller-and-a-treasurer

https://maaw.info/ControllershipTreasurership.htm

REPORTER: PALACIO, JEREMIE

Introduction to Financial Management

Principles of Financial Management
The principles of financial management work as a guideline for managing financial
activities. If you properly understand and apply the core principles in your financial activities
then you will never become financially loser. To get the most benefit from a financial action,
the person needs to be careful enough to handle and trade-off the risk and return.

• TRADE OFF RISK AND RETURN - Investors should be careful when constructing their portfolio
of available investment opportunities. Investment choices are based on individual risk
reward trade-offs. There is a positive correlation between risk and return. Higher risk and
higher expected return. Your portfolio should include low risk assets paired with high risk
assets. Financial managers carefully manage this risk and reward. This is a core principle of
finance and financial management.
• FORMATION OF OPTIMAL CAPITAL STRUCTURE - The capital structure is the relationship
between debt and equity in the total assets of a company. By examining the capital
structure, investors can easily understand an organization's funding patterns. A financially
sound organization should rely on debt financing rather than equity financing. The reason is
that own funds, or stocks, are more expensive than borrowed capital. As such, it is the CFO
or financial manager's job to ensure that the company has the optimal mix of debt and
equity to minimize the weighted average cost of capital when financing. This principle is so
important that it cannot be overlooked.
• DIVERSIFICATION OF BOTH INVESTMENT AND BORROWING - Portfolio construction through
diversification is applicable to both investing and borrowing. The goal is to minimize the cost
of borrowing and financing and maximize the return on investment. It is the balance of risk
and reward that must be considered when making decisions. As such, the overall financial
risk remains affordable.
• AWARE OF TIME VALUE OF MONEY - Always be aware of the time value of money. Money
that comes in now is worth more than money that comes in later. So if you are responsible
for managing money, you should consider the time value of money and the average rate of
depreciation due to inflation and other factors.
• FORECAST CASH FLOWS - Cash is the most liquid asset and can flow in or out. Flow patterns
influence financial decisions. Reliable cash flow is preferable to uncertain cash flow. To
ensure a reliable supply of cash for all organizational activities, you need to forecast cash
flows and manage cash based on your requirements. Maintaining an adequate amount of
liquidity reflects the application of financial management principles.
• TAKE A RIGHT INSURANCE PLAN - A right insurance plan can help an organization redirect
risks to insurance companies. Risk transfer is possible for premiums paid by policyholders.
Choosing an insurance policy involves a financial decision, and the amount of the premium
depends on the type of insurance policy. Therefore, as part of your financial management,
you should maintain a proper insurance plan.
• CONCERTRATION ON WEALTH MAXIMIZATION - Wealth maximization is the process of
maximizing the value of an organization. H. Maximize the capital value of the organization.
As the financial manager or top management of your organization, if you are trying to
manage your finances, you should focus on how to maximize the value of your organization.
Wealthy companies can invest more in innovative product development. This will help your
business grow more smoothly.
• REINVEST RATHER THAN CONSUME - If your business is financially strong, don't just consume
what your business produces, invest in the most profitable opportunities. Reinvestment
 helps expand businesses, create jobs, create value, and exchange value into the economy. A
good practice of financial management is to always look for new opportunities and decide
to reinvest available funds whenever you find a worthwhile investment opportunity.
• DETERMINE COST OF CAPITAL - Here, cost of capital refers to the cost associated with the
payments imposed on the funding of debt and capital. The weighted average cost of capital
is the actual cost of capital, which is the average cost of both the cost of capital and the cost
of debt. Effective financial management always weighs the financial benefits against the
costs associated with that cost of capital. If the expected return is higher than the cost of
capital, you can invest.
• FINANCIAL DECISION ALIGN WITH BUSINESS LIFE CYCLE - The Company is constantly going
through ups and downs. Any time you make a financial decision, you should consider your
current position in the business life cycle and your projected position in the cycle. So you can
plan to ensure the ultimate financial return for your business. A good financial plan will help
you squeeze the sweetest juice out of any investment or fundraising opportunity. During the
life of your business, you may need to make various financial decisions, and those decisions
will affect the finances of that business. It should match the situation.

• https://ordnur.com/academic-study/finance/10-principles-of-financial-management
2020/

Goals of Financial Management

The goals of financial management can be classified in many ways. Official goals,
operative goals and operational goals are one classification. Official goals are the general aims of
the organization. Maximization of return on investment and market value per share may be
termed as official goals of financial management. Operative goals indicate what the organization
is really attempting to do. They are focused and help in choice making.

• PROFIT MAXIMIZATION - Profit maximization is the declared goal of financial management.

Profit is the excess of income over expenses. Profit maximization is thus maximizing sales for
a given expenditure, or minimizing spending for a given income, or maximizing income and
minimizing expenses simultaneously. Sales can be maximized through pricing and scaling
strategies. By increasing your selling price, you can maximize your sales unless demand
decreases accordingly. You can maximize your profit by using price elasticity of demand
factors to increase sales volume. Cost minimization relies on the variability of costs due to
volume, cost perception, and input market conditions. Maximizing profit requires a
combination of factors.
• PROFITABILITY MAXIMIZATION - Profit as an absolute number tells less and hides more. Profit
should be related to sales, capacity utilization, production, or capital invested. Benefits
become more significant when expressed in relation to the size or scaling factors above. In
this sense, relative profit is called profitability. Profit per rupee sold, profit per unit
produced, profit per rupee invested, etc. are more specific. Therefore, this goal is superior
 to the profit maximization goal.
• EPS (EARNINGS PER SHARE) MAXIMIZATION - Maximization Earnings per Share (EPS), we
need to maximize after-tax earnings given the number of shares outstanding. This goal is
similar to maximizing profitability in terms of deliverables and requirements. It is very
specific, both in terms of the type of benefit and the standard against which it is compared.
The downside is that maximizing EPS can lead to depreciation. This is because the impact of
dividend policy on value is completely ignored.
• LIQUIDITY MAXIMIZATION - Liquidity refers to the ability of a company to repay short-term
debt on time. This ability depends on the ratio of current assets to current liabilities, the
aging pattern of current assets and current liabilities, the composition of current assets, and
the quality of non-cash current assets. relationships with short-term creditors; relationships
with bank employees, etc.; Higher working capital ratios, perfect match of working capital
maturities and current liabilities, balanced composition of working capital, sound and
“liquid” working capital, i.e. H. understanding creditors and pleasing bankers Helping
companies maintain high liquidity. Acquiring all of this is not easy and comes with costs and
risks.

• https://www.mbaknol.com/financial-management/goals-of-financial-management/