Finman

Financial Management investors?
Reference: Payongayong, Roque, Ayuyao

3 Elements Financial Management
Topic 1: Introduction to Financial Management 1. Financial Planning
- The business needs to ensure that there
Introduction: is enough funding to meet the needs of
Financial Manager’s goal: the business. This leads to financial
To maximize the shareholder’s wealth [measured decision-making process or forecasting.
through share price] 2. Financial Control
To preserve stakeholder’s wealth - It helps the company to ensure that the
business objectives are being met.
Lesson Proper: 3. Financial Decision Making
Financial Management Scope of Financial Management

- about preparing, directing, and 5 A’s by Dr. Saxena
managing the money activities of a
company such as buying, selling, and 1. Anticipation – financial are being estimated.
using money to its best results to 2. Acquisition – collects financial from different
maximize wealth or produce best value sources.
for money. 3. Allocation – those collected financial should
In short… be allocated to buy fixed assets.
Applying general management concepts to 4. Appropriation – The company profits
the cash of the company. distribute among the shareholders.
5. Assessment – Assessing if the company’s
objectives are being met.
Key Objectives of Financial Management
- to create wealth for the business, Finance Areas and Career Opportunities
generate cash, and provide an adequate Financial Service Managerial Finance
return on investment.  Concerned with  Concerned with
the design and the duties of the
Personal Finance and Business Finance delivery of financial
Personal Finance Business Finance advice and manager
 deals with an  Same type of financial working in a
individuals decisions products to business.
decisions focusing on individuals,  Budgeting or
concerning the business, and Financial
spending and governments. Planning
investing of Career Opportunities: Career Opportunities:
income. 1. Banking 1. Financial
Questions need to Questions need to 2. Personal Analyst
answer: answer: financial 2. Capital
planning Budgeting
1. How much of 1. How the firms 3. Real estate Analyst
their earnings raise money 4. Insurance 3. Cash Manager
should they from investors?
spend? 2. How to invest
2. How much money to earn Professional Certifications
should they a profit? 1. Chartered of Financial Analyst (CFA)
save? 3. How to reinvest 2. Certified Treasury Professional (CTP)
3. How should profits in the 3. Certified Financial Planner (CFP)
they invest their business or 4. American Academy of Financial
savings? distribute them Management (AAFM)
back to
5. Professional Certifications in Accounting
5.1 CMA
5.2 CPA Corporation
5.3 CIA - Entity created by law
- Have the legal powers of an individual in
Legal Forms of Business Organization that it can be sue and be sued
- Make and be part of a contracts
Sole Proprietorship - It can acquire property on its own name
- Most common form of business - Separate on its owner
organization. - The stockholders are not responsible for
- Owned by one person and operated for the debts and taxes
his or her own profit. Profit Non-Profit
- Legally responsible for the debts and Organization Organization
taxes of the business and very involved Governed Board of Board of
in its day-to-day activities. by Directors Trustees
Examples: wholesale, retail, service, and
construction services. Advantages Disadvantages
Advantages Disadvantages Limited Liability Bound by relatively
Simple The owner may lack of more government
expertise and regulations/ restrictions
experience to run Perpetual Life Expensive to organize
business Ease in transferring
The owner has a May incur unlimited ownership, expansion
freedom to make all liability obtaining resources or
decisions financing
Enjoy all the profits
Minimal legal Note:
restrictions and For Accounting purposes, all forms of business are
government regulations considered separate entities. However, the
It can be discontinued corporation is the only form of business that is a
with great ease separate legal entity.
Tax rate is relatively at
the minimum Finance, Economics and Accounting
Partnership Economics
- Owned by two or more people and - Study of choice
operated for profit. - It is a social science that deals with
- Based on an agreement called Articles individual or collective economic
of Co-Partnership. activities such as production,
- Legally responsible for debts and taxes consumption, distribution and transfer of
of the business. money and wealth.
- Partners must agree upon amount each Finance Accounting
partner will contribute, percentage of Cash basis Accrual basis
ownership, share of profits, duties, and Focuses on the actual Recognize revenues at
responsibilities. inflows and outflows of the point of sale and
Examples: medical and dental practices, cash recognizing expense when incurred
accounting, architectural, and law firms. In revenues when cash is regardless on when
short, professional services. collected and expenses cash will flow into or
Advantages Disadvantages when actually paid. out of the firm.
Ease of organization Unlimited Liability
It can raise more Limited Life
capital for the firm
Key Activities of Financial Manager related to
Balance Sheet
1. Investment Decisions – deals with the items

that appear on the asset section of the
balance sheet.
2. Financing Decisions – maintains proper
combination of short- and long-term
financing. Refers to the items that appear
on the liability and equity section of the
balance sheet.

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Financial Management investors?

Reference: Payongayong, Roque, Ayuyao

Financial Management Scope of Financial Management

1. Investment Decisions – deals with the items

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