Business

Finance
 Should I save first before
I spend? or Should I
spend first before I save?

https://forms.gle/aYdU5hGBB8jb7Q5t6
What is BUSINESS FINANCE?
 is a business activity which is concerned with
the acquisition and conservation of capital
funds in meeting financial needs and overall
objectives of business enterprises.
What is FINANCE?
 is the function or area which is responsible for
managing the aspect of the operations that
deals with money matters. It is concerned not
only with the allocation of funds but also with the
sources of funds.
The study of finance addresses three basic questions:
1. What type of investments (short term and/or long
term) should the firm undertake?
2. What sources of funds (short term and/or long
term) should the firm tap to fund these
investments?
3. How can the firm ensure that its cash flows will
suffice to support its day-to-day operations?
Financial Management
 involves the actual handling of an
organization’s funds, which covers operational,
investments, and financial decisions
Two Branches of Finance
1. Private Finance – is the management and
analysis of the financial activities of an
individual, business enterprise, etc.
2. Public Finance – is the study the role of the
government and the impact of the various
financial activities undertaken by government,
in an economy
Financial Institution
 facilitate the flow of funds in the financial
market through the buying and selling of
financial securities
Various Types of Financial Institution
1. Commercial Banks
2. Savings and Loans Banks
3. Investment Banks
4. Insurance Companies
5. Investment Companies
Financial Instrument
 is a monetary contract between parties.
 Financial Instrument

Equity Debt
Securities Securities
Equity Security
 is a financial instruments that represents an
ownership share in a corporation.
 it gives the holder the right to the proportion of
the earnings of the issuing organization.
Debt Security
 refers to money borrowed that must be repaid
that has a fixed amount, maturity dates, and
usually a specific rate of interests.
Financial
Market
What is a MARKET?
 is a place where two parties are
involved in transaction of goods and
services in exchange of money
What is a FINANCIAL MARKET?
 is a place where individuals are
involved in sale and purchase of
financial products such as shares,
mutual funds, bonds, equities, etc
 Various Types of Markets
 Capital Market
 Stock Market
 Bond Market
 Commodity Market
 Money Market
 Equity Market
 Insurance Market
 Mortgage Market
 Foreign Exchange Market
Capital Market
 is a market where investors buy and sell
medium and long term financial assets
 there are two types of capital market; the
Primary Market and the Secondary Market
Two Types of Capital Market
1. Primary Market
 is a market where securities are created
 in this market that firms sell new stocks and
bonds to the public for the first time

2. Secondary Market
 is a market where investors buy and sell
securities they already own
Stock Market
 is a market which deals with the
issuance and trading of shares and
stocks at a certain price

Bond Market
 is a market in which the investors are
provided with the issuance and trading
of debt securities
Equity Market
 is a market where the investors buy
and sell fixed claims or debt instruments

Insurance Market
 is a market that deals with the trading of
insurance products
Mortgage Market
 is a market where various financial
involved in providing loans to
individuals on various residential and
commercial properties

Foreign Exchange Market

 is a globally operating market dealing in
the sale and purchase of foreign currencies
Financial
System
 Financial System

Financial Users of
Intermediaries Funds
Savers
• Banks (Borrower /
• Households Investors)
• Insurance
• Individuals Companies • Households
• Corporations • Credit Unions • Individuals
/ Companies
• Mutual Funds • Corporations
• Government / Companies
Agencies • Other
Financial • Government
Institutions Agencies
 The Corporate Organization
Structure

Board of Directors

President

VP for VP for
Sales &
VP for VP for Administ
Finance Production
Marketing ration
Board of Director
 it is the highest policy-making body in a
corporation
 The primary responsibility is to ensure that the
corporation is operating to serve the best
interest of the stockholders
Responsibilities of the Board of Director
1. Setting the policies on investments, capital
structure, and dividends.
2. Approving company’s strategies, goals, and
budget.
3. Appointing and removing members of the
top management including the president.
4. Determining top management’s
compensation.
5. Approving the information and other
disclosures reported in the financial
statements.
Responsibilities of the President
1. Overseeing the operations of a company
and ensuring that the strategies as
approved by the board are implemented
as planned.
2. Performing all areas of management:
planning, organizing, staffing, directing, &
controlling.
3. Representing the company in professional,
social, & civic activities.
Responsibilities of the VP for Sales and Marketing
1. Formulating marketing strategies and plans.
2. Directing and coordinating company sales.
3. Performing market and competitor analysis.
4. Analyzing and evaluating the effectiveness
and cost of marketing methods applied.
5. Conducting or directing research that will
allow the company to identify new
marketing opportunities.
6. Promoting good relationships with customers
and distributors.
Responsibilities of the VP for Production
1. Ensuring production meets customer
demands.
2. Identifying production technology or
process that minimizes production cost &
makes the company cost competitive.
3. Coming up with a production plan that
maximizes the utilization of the company’s
production facilities.
4. Identifying adequate and competitively
priced raw material suppliers.
Responsibilities of the VP for Administration
1. Coordinating the functions of
administration, finance, & sales & marketing
departments.
2. Assisting other departments in hiring
employees.
3. Providing assistance in payroll preparation.
Responsibilities of the VP for Administration
1. Coordinating the functions of
administration, finance, & sales & marketing
departments.
2. Assisting other departments in hiring
employees.
3. Providing assistance in payroll preparation.
4. Determining the location and the maximum
amount of office space needed by the
company.
5. Identifying means, processes, or systems that
will minimize the operating costs of the
company.
Responsibilities of the VP for Finance
 Financing
 Investing
 Operating
 Dividend Policies