The financial management and its uses 01

Financial management involves planning, organizing, controlling, and monitoring financial resources to achieve an organization's goals and objectives. It encompasses budgeting, forecasting, investing, and managing cash flow to ensure financial stability and growth. Effective financial management aims to optimize the use of assets, minimize costs, and maximize returns while mitigating risks. It involves strategic decision-making to balance profitability with sustainability and ensure long-term financial health.

1. Financial
Managemen
t
September 18-20, 2019
Hotel Ariana, Bauang, La Union
Arlenne C. Espinoza
CDS II

2. Its
Meanin
g

3. Its
Meaning
The planning, organizing,
directing and controlling the
financial activities of an
enterprise.
Concerns with procurement,
allocation and control of
financial resources.
It refers the efficient and
effective management of
money (funds) in such a
manner as to achieve the
goals of the organization.

4. Some
definitio
ns
“Financial management is the
activity concerned with planning,
raising, controlling and
administering of funds used in
the business.” – Guthman and
Dougal
“Financial management is that
area of business management
devoted to a judicious use of
capital and a careful selection of
the source of capital in order to
enable a spending unit to move
in the direction of reaching the
goals.” – J.F. Brandley

5. Some
definitio
ns
“Financial management is the
operational activity of a business that is
responsible for obtaining and
effectively utilizing the funds necessary
for efficient operations.”- Massie

7. Scope/
Elemen
ts
1. Investment decisions
(capital budgeting);
2. Financial decisions
(type of source, and
period, cost & returns of
financing; and
3. Dividend decision –
(shareholders or members
and retained profits)

9. Objectiv
es
1. To ensure regular and adequate
supply of funds;
2.To ensure adequate returns to the
shareholders ;
3.To ensure optimum funds
utilization;
4.To ensure safety on investment
(funds should be invested in safe
ventures so that adequate return
can be achieved); and
5.To plan a sound capital structure
(sound and fair composition of
capital-balance is maintained
between debt and equity capital).

11. Functio
ns
1.Estimation of capital requirements
(make estimation with regards to
capital requirements);
2.Determination of capital composition
(involves short-term and long-term
debt equity analysis);
3.Choice of sources of funds (shares,
loans, deposit, bond);
4.Investment of funds (decide to allocate
funds into profitable ventures);
5.Disposal of surplus (dividend &
retained profits);
6.Management of cash; and
7.Financial controls (control over
finances).

13. Importan
ce
Helps organisations in financial planning;
Assists organisations in the planning and
acquisition of funds;
Helps organisations in effectively utilising
and allocating the funds received or
acquired;
Assists organisations in making critical
financial decisions;
Helps in improving the profitability of
organisations;
Increases the overall value of the firms or
organisations;
Provides economic stability;
Encourages employees to save money,
which helps them in personal financial
planning.

14. FINANCIAL
PERFORMANC
E STANDARDS
FOR
COOPERATIVE
S

15. FINANCIAL
PERFORMANC
E STANDARDS
FOR
COOPERATIVE
S
1.3 Sol v en cy
Measu res th e d eg r ee of p r otecti on th at th e coop er ativ e h as for memb er s sav in g s an d sh are cap ital con tr i b u tion in th e ev en t of l iq u i d ation of th e coop er ativ e 's assets an d l iab i lities
1.4 Ne t In stitu tion al Cap i tal
Measu res th e lev el of in stitu tion al cap i tal to ab sor b p oten tial losses
1.5 Cap i tal Ad eq u acy Rate
Measu res th e su ffici en cy of th e cap i tal to cov er th e r i sk assets

16. FINANCIAL
PERFORMAN
CE
STANDARDS
FOR
COOPERATIV
ES
2. TURN-OVER RATIO
2.1 Asset turn over
Measures how efficiently the cooperative uses its asset to
generate revenue
2.2 Receivable turn-over
2.2.1 Accounts Receivable turn-over
Measures the number of times accounts receivables are
collected within the reporting period
2.2.2 Loan Receivable Turn Over
Measures the number of times loans receivables are
collected within the reporting period

17. FINANCIAL
PERFORMANC
E STANDARDS
FOR
COOPERATIVE
S
2.2.3 Service Receivable Turn Over
3. EFFICIENCY
3.1 Administrative Efficiency
Measures the cost of efficiently managing the cooperative's assets
3.2 Cost of Borrowing Rate
Measures the efficiency of borrowings in financing its operation
3.3 Cost per volume of Business
Measures the efficiency in managing the cooperative's business

18. FINANCIAL
PERFORMAN
CE
STANDARDS
FOR
COOPERATIV
ES
3.4 Extent of Volume of Business
Measures the ability of the cooperative to use the assets to generate
business
3.5 Growth in Members' Contribution
Measures the ability of the cooperative to encourage members to
increase their capital contribution
3.6 Delinquency Rate
Measures the risk of default in the portfolio or the rate of uncollectible
accounts

19. FINANCIAL
PERFORMANC
E STANDARDS
FOR
COOPERATIVE
S
3.7 Adequacy of Provisioning of APLL (over 12 months
past due)
Measures the adequacy of the allowance for expected
losses on loans
3.8 Adequacy of Provisioning of 1 to 12 months past due
4. PROFITABILITY
4.1 Return on Assets
To measure the capacity of assets to generate income

20. FINANCIAL
PERFORMAN
CE
STANDARDS
FOR
COOPERATIV
ES
4.2 Return on Member's share
Measures the earning capacity of member's
share capital
4.3 Rate of Net Surplus
Measures the capacity of the cooperative to
generate surplus
5. STRUCTURE OF ASSETS
5.1 Percentage of non-earning asset over
total assets
Measures the percentage of total assets that
are not producing income.

21. FINANCIAL
PERFORMAN
CE
STANDARDS
FOR
COOPERATIV
ES
5.2 Percentage of Investment
Measures the degree of assets devoted to investment
5.3 Extent of Assets financed by obligations
Measures the extent of assets financed by external and internal
borrowings
5.4 Extent of External Borrowings
Measures the percentage of external borrowings over total
borrowings

22. FINANCIAL
PERFORMAN
CE
STANDARDS
FOR
COOPERATIV
ES
5.5 Extent of Assets financed by
Members' Share Capital
Measures the degree of
participation of members' share to
total assets

23. Referenc
es
https://www.managementstudyguide.com/financial-
management-articles.htm
freepik.com
humentum.org
businessjargons.com
businessdictionary.com
startupaplan.com
https://www.lsbf.org.uk/blog/news/importance-of-financial-
management/117410
https://www.toppr.com/guides/business-environment/
business-functions/financial-management/
http://www.yourarticlelibrary.com/financial-management/d
efinition-financial-management/financial-management-
definition-nature-and-objectives-financial-management/
69606
google.com