Professional Documents
Culture Documents
Group 12
Group 12
>THE FINANCE
FUNCTION
CHAPTER 12
DETERMINATION
OF FUND
REQUIREMENTS
PROCUREMENT
OF
FUNDS
EFFECTIVE AND
EFFICIENT USE
OF FUNDS
DETERMINATION
OFREQUIREMENTS
FUND
CHAPTER 12
SOURCES
OF FUND
CHAPTER 12
SOURCES OF FUNDS
1. Cash sales
2. Collection of Accounts Receivables
3. Loans and Credits
4. Sale of Assets
5. Ownership Contribution
6. Advances from customers
ADVANTAGES
1. They are easier to obtain.
2. Short-term financing is often less costly.
3. Short-term financing offers flexibility to the
borrower.
DISADVANTAGES
1. Short-term credits mature more frequently.
2. Short-term debts are more costly than longterm debts
TERM LOANS
commercial or industrial loan from a
commercial bank, commonly used for plant and
equipment, working capital, or debt repayment
BONDS
It is a certificate of indebtedness issued by a
corporation to a lender
TYPES OF BONDS
1. Debentures
2. Mortgage Bond
3. Collateral Trust Bond
4. Guaranteed Bond
5. Subordinated Debentures
6. Convertible Bonds
7. Bonds with Warrants
8. Income Bonds
BEST SOURCE
OF FINANCING
CHAPTER 12
FACTORS RECOMMENDED BY
SCHALL AND HALEY:
1. Flexibility
2. Risk
3. Income
4. Control
5. Timing
6. Other factors like collateral values, flotation
costs, speed, and exposure
THE FIRMS
FINANCIAL
HEALTH
CHAPTER 12
INDICATORS OF
FINANCIAL
HEALTH
CHAPTER 12
BALANCE SHEET
INCOME STATEMENT
STATEMENT OF CHANGE
IN FINANCIAL POSITION
RISK
MANAGEMENT
AND INSURANCE
CHAPTER 12
RISK
It refers to the uncertainty concerning loss or
injury
SOME RISKS AN ENGINEERING FIRM
CAN FACE
1. Fire
2. Theft
3. Floods
4. Accidents
5. Nonpayment of bills by customers
6. Disability and death
7. Damage claim from other parties
TYPES OF RISK
1. Pure Risk
2. Speculative Risk
RISK MANAGEMENT
an organized strategy for protecting and
conserving assets and people
RISK RETENTION
- Is a method of handling risks wherein the
management assumes the risks
HEDGING
- Refers to making commitments on both sides
of a transaction so the risks offset each other
END