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    Lesson 1 - Intro To FM

    Uploaded by

    Stanley Aquino
    This document provides an introduction to financial management. It defines financial management as the process of planning, acquiring, and utilizing funds in a way that achieves a firm's goals of making money and adding value for owners. There are three main types of financial decisions: investment decisions about committing funds to projects, financing decisions about the mix of debt and equity used, and dividend decisions about payments to owners. Financial objectives include short-term returns, long-term growth and survival. Responsibilities to achieve these objectives include evaluating investments, determining financing needs, and making operating decisions around cash levels and credit policies.

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    Lesson 1 - Intro To FM

    Uploaded by

    Stanley Aquino
    31 views2 pages
    This document provides an introduction to financial management. It defines financial management as the process of planning, acquiring, and utilizing funds in a way that achieves a firm's goals of making money and adding value for owners. There are three main types of financial decisions: investment decisions about committing funds to projects, financing decisions about the mix of debt and equity used, and dividend decisions about payments to owners. Financial objectives include short-term returns, long-term growth and survival. Responsibilities to achieve these objectives include evaluating investments, determining financing needs, and making operating decisions around cash levels and credit policies.

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    Lesson 1 - Intro to FM

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    This document provides an introduction to financial management. It defines financial management as the process of planning, acquiring, and utilizing funds in a way that achieves a firm's goals of making money and adding value for owners. There are three main types of financial decisions: investment decisions about committing funds to projects, financing decisions about the mix of debt and equity used, and dividend decisions about payments to owners. Financial objectives include short-term returns, long-term growth and survival. Responsibilities to achieve these objectives include evaluating investments, determining financing needs, and making operating decisions around cash levels and credit policies.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    31 views2 pages

    Lesson 1 - Intro To FM

    Uploaded by

    Stanley Aquino
    This document provides an introduction to financial management. It defines financial management as the process of planning, acquiring, and utilizing funds in a way that achieves a firm's goals of making money and adding value for owners. There are three main types of financial decisions: investment decisions about committing funds to projects, financing decisions about the mix of debt and equity used, and dividend decisions about payments to owners. Financial objectives include short-term returns, long-term growth and survival. Responsibilities to achieve these objectives include evaluating investments, determining financing needs, and making operating decisions around cash levels and credit policies.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Lesson 1: Introduction to Financial a.

    quantum of profits to be
    Management distributed to the owners,
    b. the frequency of such
    payments; and
    Nature of Financial Management c. the amounts to be retained by
    the firm.
    - a.k.a. business finance, managerial
    finance Financial Objectives of Business
    - a decision-making process concerned Organization
    with:
     Short and Medium-Term
     planning
    - Maximization of return on capital
     acquiring
    employed or return on investment
     utilizing funds - Growth in earnings per share through
    in a manner that achieves the firm’s maximization of net income or profit
    goal. - Efficient procurement and utilization
    of short-term, medium-term, or long-
    Goal: term funds.
    - make money  Long-term
    - add value for the owners - Growth in the market value of the
    equity shares through maximization
    Types of Financial Decisions of the firm’s market share and
    1. Investment Decisions – those which sustained growth in dividend to
    determine how scarce or limited shareholders.
    resources in terms of funds of the - Survival and sustained growth of the
    business firms are committed to firm.
    project. Responsibilities to achieve the Financial
    - Considers the profitability of each Objectives
    individual project proposal that will
    contribute to the overall profitability  Investing
    of the firm and lead to the creation of - Evaluation and selection of capital
    wealth. investment proposal
    - Weighing of risks; investee must be - Determination of the total amount of
    stable funds that a firm can commit for
    2. Financing Decisions – assert the investment.
    mixed of debt and equity chosen to - Prioritization of investment
    finance investments should alternatives
    maximize the value of investments - Determination of fixed assets to be
    made. acquired
     Considers the cost of finance - Asset replacement decisions
    available in different forms and the  Maximization of the use of
    risks attached to it. fixed assets
    3. Dividend Decisions – concerned - Purchase or lease decisions
    with the determination of:
    - Restructuring reorganization mergers
    and acquisition
     Financing
    - Determination of the financing
    pattern of short term, medium-term,
    and long-term funds requirements
    - Determination of the best capital
    structure or mixture of debt and
    equity financing
    - Arrangement with bankers, suppliers,
    and creditors for its working capital,
    medium-term and long-term fund
    requirements.
     Operating
    - The level of cash, securities, and
    inventory that should be kept on
    hand.
    - The credit policy
    - Source of short-term financing
    - Financing purchases of goods

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