MRS. GEORGINA C.

FRANCISCO
Instructor
 CHAPTER 1
INTRODUCTION TO FINANCIAL
MANAGEMENT
What is Finance?
The Art and Science
of Managing Money
It includes financial service
and financial instruments.
Finance is also referred as
the provision of money at
the time when it is needed.
TYPES OF FINANCE
 PRIVATE FINANCE– which
includes the individual, firms,
business or corporate financial
activities to meet the
requirements.
 Public Finance – which concerns
with revenue and disbursement of
government
DEFINITION OF FINANCIAL
MANAGEMENT
Financial Management is. . .
 an integral part of overall
management. It is concerned
with the duties of the
financial managers in the
business firms.
TYPES OF FINANCE
OBJECTIVES IF FINANCIAL
MANAGEMENT

PROFIT MAXIMIZATION

WEALTH MAXIMIZATION
FAVOURABLE ARGUMENTS FOR
PROFIT MAXIMIZATION

 Main aim is earning profit

 Profit is the parameter of the business
operation
 Profit reduces risk of the business
concern
 Profit is the main source of finance
 Profitability meets the social needs also
UNFAVOURABLE ARGUMENTS
FOR PROFIT MAXIMIZATION
 Profits maximization leads to exploiting
workers and consumers
 Profit maximization creates immoral
practices such as corrupt practice and
unfair trade practice
 Profit maximization objectives leads to
inequalities among the stake holders,
customers, suppliers, public shareholders.
Wealth Maximization. . .
 Is also known as value
maximization or net present worth
maximization.

 Itinvolves latest innovations and

improvements in the field of the
business concern.
FAVOURABLE ARGUMENTS FOR
WEALTH MAXIMIZATION
 It ensures the economic interest of the
society
 Provides efficient allocation of resources
 Considers the comparison of the value to
cost associated with the business
concern.
 The main aim of the business under this
concept is to improve the value or wealth
of the shareholders.
UNFAVOURABLE ARGUMENTS
FOR WEALTH MAXIMIZATION
 Leads to prescriptive idea of the
business concern but it may not be
suitable to present day business
activities
 Creates ownership-management
controversy
 Management alone enjoy certain
benefits
APPROACHES TO
FINANCIAL
MANAGEMENT
Traditional Approach
Is the initial stage of financial
management, which was
followed, in the early part of
during the year 1920 to 1950.
This approach is based on the
past experience and the
traditionally accepted methods.
Traditional Approach consists of
the following area;

 Arrangements of funds from

lending body
 Arrangement of funds through
various financial instruments
 Finding out the various sources
of funds
 FUNCTIONS OF
FINANCE MANAGER
Finance Manager has the ff. major
functions;
 Forecasting Financial
Requirements
 Acquiring Necessary Capital
 Investment Decision
 Cash Management
 Interrelation with other
departments
Importance of Financial
Management
 Financial Planning
 Acquisition of Funds
 Proper use of Funds
 Financial Decision
 Improve Profitability
 Increase the Value of the Firm
 Promoting savings
 CHAPTER 2
FIANNCIAL STATEMENT
ANALYSIS