MODULE DETAILS

NAME:

STRAND: BLOCK:

SUBJECT: Business Finance MODULE: 1

GRADE LEVEL Grade Eleven (11)
(Baitang) Grade Twelve (12)

GRADING PERIOD  First Semester

 First Quarter
(Panahunan)  Second Semester Second Quarter

Financial management starts with a plan. This applies to

both individuals and companies. It is not enough to have
INTRODUCTION cash and other resources today. Such resources, if not
(Panimula) managed properly, can be wiped out. Hence, financial
management is a must.

The learners will be able to:

1. Define finance and how it affects their daily life in
LEARNING OBJECTIVES making decisions
(Kasanayang Pampagkatuto) 2. Explain the major role of financial management and
the different individuals involved

KNOWLEDGE ENRICHMENT SKILLS DEVELOPMENT CHARACTER ENRICHMENT

(Pagpapayaman ng Kaalaman) (Karagdagang Pagkatuto) (Husay sa Pagpapakatao)

REFERENCES (Arthur S. Cayanan, 2017)

(Sanggunian)

Author/ Coordinator LAWRENCE Y. PIGUERRA

CHECKED by: CZAR CIPRIAN S. LOPEZ, Assistant Principal

VALIDATED by: NIÑO JOSEPH A. BALLARES, SHS Principal

LESSON PROPER
Introduction to Financial Management

Business Finance is an art and science of managing money. The role of finance in
business is also to make sure there are enough funds to operate and that you’re
spending and investing wisely. The importance of business finance lies in its capacity to
keep business operating smoothly without running out of cash while also securing
funds for longer-term investments.

Business run on money and business finance guides you to make shrewd and
prudent decisions about cash flow and longer term funding strategies. As you develop
skills and strategies for using the funds you have and for accessing additional capital
when needed, you will improve your company’s profitability and increase your
potential for leveraging new opportunities.

Shareholder’s Wealth Maximization

In these days, choosing a corporate objective of a firm is extremely important and

has a determinant meaning to the success or failure of a corporation in controlling the
market. To gain it, shareholders’ interest satisfaction plays a key role in creating profit
for a company. Which governance objective should a corporation follow, maximizing
shareholder value or satisfying stakeholder’s interest or balancing the interest of
shareholders? This is an inextricable problem for each corporation to pursue its own
goal.

Financial System

The financial system links the savers and the users of funds. Shown in the figure
1 is an overview of the financial system.

Households
Savers Individuals
Govermment agencies

Banks
Fiancial Intermediaries Insurance companies
Stock exchange

Households
Users of Funds
Individuals
(Barrowers/Invesment)
Corporations/Companies

Figure 1: Overview of the Financial System

Savings can come from households, individuals, companies, government

agencies, or any other entity whose cash inflows are greater than their cash outflows.
The financial system through financial intermediaries provides a mechanism by which
these savings can channelled to users of funds, borrowers, and investors.

The next section will discuss the different functions that each financial
intermediary may perform:

 Banks – provide mechanism where savers can put their excess funds through
deposit.
 Insurance Companies – Insurance companies offer different products. Insurance
products can be broadly categorized into life insurance products and non-life
 insurance products. Life insurance products protect the insured from loss of life
while non-life insurance products protect the insured from the loss of or damage to
properties.
 Stock Exchange – provides a system for the trading of equity securities of publicly
listed companies. These equity securities are common stocks and preferred stocks.
An individual who wants to invest and trade in the stock market cannot go directly
to PSE to buy and sell stocks.
 Mutual Funds – provide opportunities for big and small investors to invest in
financial instruments which they would not have considered on their own, or they
may have considered but do not have the time or the expertise to do it.

SKILLS DEVELOPMENT

A. Activity
Instruction: On the space provided, answer honestly the following questions:

1. How much is your daily allowance? If not given daily, how much is your average
allowance per day?

2. Write down all the items you spend money on. List the description and peso amount
spent for each item.

3. Compute for the balance of your allowance by deducting the expenses you listed
from your daily allowance.

4. If your answer to question number 3 is positive, what do you do with the money left?
If the answer is negative where do you get additional money?

B. Post-Assessment
Instruction: Read the situation below and answer the corresponding questions.
Answer the following questions:

1. What are the expenses that Alma incurred from going to school and returning back
from home?

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2. If you were Alma, what will you do with the remaining P100.00 from your
allowance? Why?

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CHARACTER ENRICHMENT

1. As a student, why is it important to be exposed in the concept of saving at a very

young age? Do you agree with the statement, “A child who started saving at a young
age has a higher chance of becoming successful?” Why do you say so? (10 points)

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