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Intoduction to business finance
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Intoduction to business finance

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  • 1. 17 3-1 I N T R O D U C T I O N
  • 2. 17 THE NATURE AND AIMSTHE NATURE AND AIMS OF BUSINESSOF BUSINESS The Philippine EconomyThe Philippine Economy The Role of BusinessThe Role of Business Business DefinedBusiness Defined Kinds of BusinessKinds of Business Objectives of BusinessObjectives of Business
  • 3. 17 The Philippine EconomyThe Philippine Economy Low productivity in the workplaceLow productivity in the workplace Graft and corruption in theGraft and corruption in the governmentgovernment The declining value of the pesoThe declining value of the peso Unfavorable balance of tradeUnfavorable balance of trade
  • 4. 17 Business successBusiness success associated w/ Economicassociated w/ Economic GrowthGrowth Adequate capitalAdequate capital -- prerequisite to the existence ofprerequisite to the existence of business firmsbusiness firms Availability of capitalAvailability of capital -- ready to use; at handready to use; at hand Proper Management of capitalProper Management of capital -- key ingredient in the survival andkey ingredient in the survival and
  • 5. 17 Business FailureBusiness Failure Businessman’s lack of sufficientBusinessman’s lack of sufficient skills in managing financeskills in managing finance
  • 6. 17 The Role of BusinessThe Role of Business Business firms and governmentBusiness firms and government are oriented towards theare oriented towards the provisions of goods and servicesprovisions of goods and services to the societyto the society Ex.Ex. - basic necessities- basic necessities - services- services - others- others
  • 7. 17 Business DefinedBusiness Defined Business is any lawful economicBusiness is any lawful economic activity concerned with theactivity concerned with the production and/or distribution ofproduction and/or distribution of goods and services for profitgoods and services for profit An entity is still a business if itsAn entity is still a business if its objective is to make profitsobjective is to make profits
  • 8. 17 Kinds of BusinessKinds of Business Business may be classified in severalBusiness may be classified in several ways. As to the nature of the principal activityways. As to the nature of the principal activity performed, it consist of three main divisions:performed, it consist of three main divisions: CommerceCommerce IndustryIndustry ServicesServices
  • 9. 17 Business Commerce Industry Services Marketing GeneticTrading Buy and Sell Merchandising Extractive Recreation Personal Finance Construction Manufacturing others Kinds Of Business
  • 10. 17 - CommerceCommerce Business firms which areBusiness firms which are engaged in the buying andengaged in the buying and selling of goods and services areselling of goods and services are classified as those falling underclassified as those falling under commerce:commerce: - trading- trading -merchandising-merchandising - marketing- marketing Examples: Super Markets, Sari-Examples: Super Markets, Sari- Sari stores, Dry goods store,Sari stores, Dry goods store, K I N D S O F B U S I N E S S
  • 11. 17 - Business Commerce Industry Services Marketing GeneticTrading Buy and Sell Merchandising Extractive Recreation Personal Finance Construction Manufacturing others Kinds Of Business
  • 12. 17 - IndustryIndustry Industries are those mainlyIndustries are those mainly concerned with productionconcerned with production Goods produced are those whichGoods produced are those which may be intended for ultimatemay be intended for ultimate consumption which are calledconsumption which are called Consumers goodsConsumers goods And those which are intended forAnd those which are intended for use of business and industry anduse of business and industry and which are called Producer’swhich are called Producer’s GoodsGoods K I N D S O F B U S I N E S S
  • 13. 17 - Business Commerce Industry Services Marketing GeneticTrading Buy and Sell Merchandising Extractive Recreation Personal Finance Construction Manufacturing others Kinds Of Business
  • 14. 17 - Genetic IndustriesGenetic Industries Business involved inBusiness involved in - Agriculture,- Agriculture, - Forestry,- Forestry, - and Fish Culture- and Fish Culture I N D U S T R Y C L A S S I F I C A T I O N
  • 15. 17 - Extractive IndustriesExtractive Industries Businesses involved in theBusinesses involved in the extraction of goods from naturalextraction of goods from natural resources which includeresources which include - Mining- Mining - Lumbering- Lumbering - Hunting- Hunting - Fishing- Fishing I N D U S T R Y C L A S S I F I C A T I O N
  • 16. 17 - IndustryIndustry Can be classified into theCan be classified into the following:following: - Genetic IndustriesGenetic Industries - Extractive IndustriesExtractive Industries - Manufacturing IndustriesManufacturing Industries - Construction IndusttriesConstruction Industtries K I N D S O F B U S I N E S S
  • 17. 17 - Manufacturing IndustriesManufacturing Industries Are those which convert rawAre those which convert raw materials into finished products.materials into finished products. Example:Example: - Manufacture of drugs- Manufacture of drugs - Plastics- Plastics - Food- Food - Liquor- Liquor - Footwear- Footwear - Motor Cars- Motor Cars I N D U S T R Y C L A S S I F I C A T I O N
  • 18. 17 - Construction IndustriesConstruction Industries Firms engaged in buildingFirms engaged in building infrastructures like:infrastructures like: - Airports- Airports - Seaports- Seaports - Dams- Dams - Highways- Highways I N D U S T R Y C L A S S I F I C A T I O N
  • 19. 17 - ServicesServices A service business is one whichA service business is one which sells services to buyerssells services to buyers Service Firms may be classified:Service Firms may be classified: - Recreation- Recreation - Personal- Personal - Finance- Finance K I N D S O F B U S I N E S S
  • 20. 17 - RecreationRecreation Examples:Examples: - Movie houses- Movie houses - Television- Television - Radio stations- Radio stations - Theaters for Drama and- Theaters for Drama and stage presentationsstage presentations S E R V I C E C L A S S I F I C A T I O N
  • 21. 17 - PersonalPersonal Examples:Examples: - Restaurants- Restaurants - Barber shops- Barber shops - Transportations- Transportations - Hotels- Hotels - Tailoring Shops- Tailoring Shops - others- others S E R V I C E C L A S S I F I C A T I O N
  • 22. 17 - ServicesServices A service business is one whichA service business is one which sells services to buyerssells services to buyers Service Firms may be classified:Service Firms may be classified: - Recreation- Recreation - Personal- Personal - Finance- Finance K I N D S O F B U S I N E S S
  • 23. 17 - Objectives of the BusinessObjectives of the Business A business is establishedA business is established primarily for profitprimarily for profit At times, short-term and long-At times, short-term and long- term profits are sacrificed interm profits are sacrificed in order to attain other goals suchorder to attain other goals such as:as: - Political Influence- Political Influence - Family control of the Business- Family control of the Business - Community Involvement- Community Involvement
  • 24. 17 - ObjectivesObjectives To survive and grow, business firms must attain theTo survive and grow, business firms must attain the following multiple objectives:following multiple objectives: 1. The provision of products and services to1. The provision of products and services to thethe communitycommunity 2. The satisfaction of personal objectives like:2. The satisfaction of personal objectives like: - profits for owners- profits for owners - adequate salaries and compensation- adequate salaries and compensation - psychic income for all, including pride- psychic income for all, including pride in work, security, recognition, andin work, security, recognition, and acceptanceacceptance
  • 25. 17 - ObjectivesObjectives To survive and grow, business firms must attain theTo survive and grow, business firms must attain the following multiple objectives:following multiple objectives: 3. Protection and enhancement of the human3. Protection and enhancement of the human and physical resources of societyand physical resources of society 4. Economy and effectiveness of operation4. Economy and effectiveness of operation