Factors that influence the change in the price of the stock Concept of business entity

1. Profitable Operation 1. Assets are economic resources that are owned by the business and are expected to
2. Nature of the business provide future positive cash flows
3. Prospects of the Business 2. Liabilities are financimal obligations that represents future negative cash flow
4. Projected earnings and time frame for the realization of such projected earnings 3. Owner’s equity represents the owner claims to the asset of the business.
5. Ability to meet maturing obligations Horizontal analysis- comparison of company’s financial condition and performance across time
6. Appropriate capital structure using
7. Dividend policies Vertical analysis- comparison of company’s financial condition and performance to a base amount
8. Investing decisions Planning- very much related to another management function, controlling
9. Management and market sentiment Management planning – about the setting of the goals of the organization and identifying ways to
Stakeholders- include management, employees, suppliers, customers, creditors, regulatory achieve them can be short term or long term plans
agencies, and the community where the company operates Long term plans- are reflected in the company’s business strategy
Board of directors- is the highest policy-making body in a corporation. Its primary responsibility is to Steps in planning
ensure that the corporation is operating to serve the best interest of the stockholders 1. Set goals or objectives
Responsibilities of the Board of Director 2. Identify resources
1. Setting policies on investments, capital structure and dividends 3. Identify goal-related tasks
2. Approving company’s strategies, goals and budgets 4. Establish responsibility center for accountability and timeline
President Responsibilities 5. Establish an evaluation system for monitoring and controlling
1. Overseeing the operations of a company and ensuring that the strategies as approved 6. Determine contingency plans
by the board are implemented as planned. Budget- a financial plan of the resources needed to carry out tasks and meet financial goals
2. Performing all areas of management: Planning, organizing, staffing, directing, and Budgeting- the act of preparing a budget
controlling Budgetary control- the use of budgets to control a firm activity
VP for sales and marketing Responsibility Master budget- a summary of all phases of a company plans and goals for the future, indicates the
1. Ensuring production meets customer demands sales levels, production and costs levels, income and cash flows that are anticipated for the coming
VP for Administration Responsibilities year
1. Coordinating the functions of administration, finance and sales and marketing  Operating budget- consist of budget income statement that shows the proportion of
department revenue expenses and results for operationos for a define period of time supported
2. Assisting other departments in hiring employee by the sales budget, cost of sales budget, selling and administrative express budget,
VP for Finance financial expense
Functions: 1. Financing, 2. Investing, 3. Operating, 4. Dividend Policies  Financial budget- consist of the
3 factors considered in declaring cash dividends a. Budget statement of financial position or balance sheet. This shows the
1. Availability of investment opportunities projection of assets or resources needed and sources (liabilities, and
2. Access to long term sources of funds owner’s equity) of such assets or resources
3. Capital structure b. Cash budget, this shows the projected resources and uses of cash during
the budget period
Basic financial activities c. Budgeted statement of cash flows
1. Statement of financial position- balance sheet, describes where the enterprise stands at a  Capital budget- consist of proposed expenditure for property, plant and equipment
specific date. to support expansion program, etc
2. Statement of profit or Loss- income statement, depicts the revenue and expenses for a
designated period of time
3. Statement of cash flows- depicts the way cash has changed during a designated period of
time
 Operating activities- include the cass effects of revenue
 Investing activities- include the cash effects of purchasing and selling assets
 Financing activities- include the cash effects of transactions with the owners and
creditors
4. Statement of changes in owner’s equity