BUSINESS FINANCE 12, its first topic in 1st grading

define the people connected to a company or business

1. BUSINESS FINANCE

2. OBJECTIVES: At the end of the lesson you should able to: 1. Define Finance 2. Describe who are responsible for financial management within an organization 3. Describe the primary activities of the financial manager 4. Describe how the financial manager helps in achieving the goal of the organization 5. Describe the role of financial institutions and markets

3. Guided question Do you believe that finance is the key for everything? Why? Do you experience shortage of cash? Give scenario. How much extra money do you have ? Where is it invested or how is it being used?

4. WHAT IS FINANCE AND FINANCIAL MANAGEMENT? FINANCE - is always have great importance, be it in a business or in one's everyday life. FINANCE as the science and art of managing money. It is important to manage risks in business, it is equally important to manage risk in life as well.

5. FINANCIAL MANAGEMENT - deals with the decisions that are supposed to maximize the value of shareholder's wealth. These decisions will ultimately affect the market's perception of the company and influence the share price. GOAL - maximize the value of shares of stocks. MANAGERS - are responsible for making the decisions for the company that would lead towards shareholder's wealth maximization.

6. ROLES OF EACH POSITION SHAREHOLDERS - Elect the Board of Directors (BOD). Each share held is equal to one voting right. BOARD OF DIRECTORS- is the highest policy making body in a corporation. The board's primary responsibility is to ensure that the corporation is operating to serve the best interest of the stockholders.

7. RESPONSIBILITIES OF BOARD OF DIRECTORS Setting policies on investments, capital structure and dividend policies. Approving company’s strategies, goals and budgets Appointing and removing members of the top management including the president Determining top management’s compensation Approving the information and other disclosures reported in the financial statements

8. PRESIDENT RESPONSIBILITIES Approving the information and other disclosures reported in the financial statements. Performing all areas of management planning, organizing, staffing, directing and controlling. VP FOR MARKETING Formulating marketing strategies and plans. Directing and coordinating company sales Performing market and competitor analysis. Analyzing and evaluating the effectiveness and cost of marketing methods applied Conducting or directing research that will allow the company identity new marketing opportunities which are already offered in the market Promoting good relationships with costumers and distributors

9. VP FOR PRODUCTION RESPONSIBILITIES Ensuring production meets costumer demands Identifying production technology/ process that minimizes production cost and make the company cost competitive. Coming up with the production plan the minimizes the utilization of the company’s production facilities. Identifying adequate and cheap raw material suppliers.

10. VP FOR ADMINISTRATION RESPONSIBILITIES Coordinating the functions of administration, finance, marketing department. Assisting other department in hiring employees Providing assistance in payroll preparation, payment of vendor, and collection of receivables Determining the location and the maximum amount of office space needed by the company. Identifying means, processes, or systems that will minimize the operating cost of the company. The role of the VP for Finance/ Financial Manager is to determine the appropriate capital structure of the company.

11. Capital Structure- refers to how much of your total assets financed by debt and how much is finance by equity.

12. FUNCTIONS OF FINANCIAL MANAGERS Financing decisions- include making decisions as to how to finance long term investments and working capital- which deals with the day to day operations of the company. Investing decisions- to minimize the probability of failure, long term investments have supported by a capital budgeting analysis. Operating decisions- deal with the daily operations of the company especially on how to finance working capital accounts, such as accounts receivable and inventories. Dividend policies- dividend is a part of profits that are available for distribution, to equity shareholder. The finance manager must decide whether the firm should distribute all the profits or retain them or distribute a portion and retain the balance.

13. DIFFERENCE BETWEEN FINANCIAL INSTRUMENTS and FINANCIAL INSTITUTIONS Financial institutions are companies in the financial sector that provide a broad range of business and services including banking insurance and investment management. Examples of Financial Institutions Commercial banks Insurance companies Mutual funds Pension funds

14. Financial Instruments is a real or virtual document representing a legal agreement involving some sort of monetary value. These can be debt securities like corporate bonds or equity like shares of stock. When a financial instrument issued, it gives rise to financial asset on one hand and a financial liability or equity instrument on the other. Financial asset is any asset that is a. Cash b. An equity instrument of another entity c. A contract right to receive cash or another financial asset from another entity d. A contractual right to exchange instruments with another entity under conditions that are potentially unfavorable.

15. THANK YOU!