1. CHAPTER 1:
INTRODUCTION TO
FINANCIAL ENVIRONMENT
HTM755
FINANCIAL MANAGEMENT AND ANALYSIS
FOR HOSPITALITY AND TOURISM
MOHD SAFUAN ASMI BIN KHALID 2014428276
ZULKARNAINE BIN BOHARI 2014659774
2. WHAT IS FINANCE
• The management of money from individual to large company.
• Finance fields divided into 3 sub categories that are :
PERSONAL
FINANCE
CORPORATE
FINANCE
PUBLIC
FINANCE
5. DEFINING INVESTMENT
• The purchase of plant, equipment or inventory.
• Investment in layman term indicates acquisition of an asset such as a stock or a
bond.
• The actions or process of inventing for profit or materials result.
• An expectation of future return towards certain purchase of financial product.
• Investment value indicates a present value of future benefit.
6. DEFINING FINANCIAL MANAGEMENT
• Financial management refers to the efficient and effective management of money
(funds) in such a manner as to accomplish the objectives of the organization. It is
the specialized function directly associated with the top management.
7. OBJECTIVES OF FINANCIAL
MANAGEMENT
• To ensure regular and adequate supply of funds to the concern.
• To ensure adequate returns to the shareholders which will depend upon the
earning capacity, market price of the share, expectations of the shareholders.
• To ensure optimum funds utilization. Once the funds are procured, they should be
utilized in maximum possible way at least cost.
• To ensure safety on investment, i.e, funds should be invested in safe ventures so
that adequate rate of return can be achieved.
• To plan a sound capital structure-There should be sound and fair composition of
capital so that a balance is maintained between debt and equity capital.
8. FUNCTIONS OF FINANCIAL MANAGEMENT
• Estimation of capital requirements
• Determination of capital composition
• Choice of sources of funds
• Investment of funds
• Disposal of surplus
• Management of cash
• Financial controls
• http://www.managementstudyguide.com/financial-management.htm
9. WHAT IS SOLE PROPRIETORSHIP
• A sole proprietorship, also known as the sole trader or simply a proprietorship, is a
type of business entity that is owned and run by one natural person and in which
there is no legal distinction between the owner and the business.
• There is no separate legal entity created by a sole proprietorship.
• The benefit of the sole proprietorship is the tax advantage
10. SOLE PROPRIETOR (ACTIVITY 1)
ADVANTAGES
• Individual cost setting and finance
management.
• The business legal requirements and
standard operation procedure are set
up by the individual and can be
change.
• No corporate tax payments.
• A sole proprietor have the sole power
of the business.
• Changing business structure
DISADVANTAGES
• Personally responsible for the debts
and liabilities incurred by the
business.
• The business life is limited and
depends on the individuals.
• Lower tax payments.
• Investor usually not invest on sole
proprietor, unless have opportunity.
• Minimal business strategy in terms of
cost and financial status.
11. PARTNERSHIP
• A business of firm runs by two or more partners, it’s a individual pool money,
skills and share P&L in accordance with the terms agreement.
• In absence of such agreement, a partnership is assumed to exit where the
participants in an enterprise agree to share the associated risks and rewards.
• Two basic forms of partnership, limited and normal partnership.
• Limited partnership: must have one general partnership and one limited
partnership. It is usually set up by companies that invest money in other
businesses or real estate.
• Normal partnership: partners participate to some extent in the day-to-day
management of the business
12. ACTIVITY 2
LIABILITIES, PROFIT SHARING, LIFE SPAN, ROLE IN MANAGEMENT
LIMITED PARTNERSHIP
• to the original amount of investment
made by partners.
• Distribution of business profit among
partners is based on the CONTRACTED
AGREEMENT.
• The organization can STILL OPERATE and
REMAIN IN EXISTENCE even one of the
partner perish or decides to withdraw
completely from the business.
• Partners are NOT INVOLVED in the very
day management activity.
NORMAL PARTNERSHIP
• the original amount of investment made
by partners. They could suffer from
unlimited liability.
• Distribution of business profit among
partners is based on the AMOUNT
INVESTED by each partner.
• The organization is required to CEASE
THEIR OERATIONS and CAN NO LONGER
REMAIN IN EXISTENCE.
• Partners are INVOLVED directly in the
every day management activity.
13. YOUTUBE ACTIVITY : ADVANTAGE OF
DISADVANTAGE OF PARTNERSHIP
• https://www.youtube.com/watch?v=om1ktTbK3d4
14. CORPORATIONS
• It a legal entity that is separate and distinct from its owners.
• It have the right and responsibilities that an individual possesses.
• It has the right to enter into contracts, loan and borrow money, sue and be sued,
hire employees, own assets and pay taxes.
TYPES OF
CORPORATIONS
CLOSE
CORPORATIONS
GENERAL
CORPORATIONS
PROFESSIONAL
CORPORATION
LIMITED LIABILITY
COMPANY
S CORPORATIONS
C CORPORATIONS
15. AGENCY
RELATIONSHIPS
• The principal-agent relationship is an arrangement in which one entity legally
appoints another to act on its behalf. In a principal-agent relationship, the agent
acts on behalf of the principal and should not have a conflict of interest in
carrying out the act.
• For example, when an investor buys shares of an index fund, he is the principal,
and the fund manager becomes his agent. As an agent, the index fund manager
must manage the fund, which consists of many principals' assets, in a way that
will maximize returns for a given level of risk in accordance with the
fund's prospectus.
16. MERGER
• A combination of two or more firms into single firms.
• WHAT IS THE MOTIVES OF MERGER?
17. ACQUISITION
• A purchase by company to another company through none new company
establishment forms.
• It can be in a friendlier approach or event hostile approach.
• Usually done by tender offer. Example in the newspaper.
18. WHAT THE BENEFIT OF MERGER AND
ACQUISITIONS?
COST DRIVER
• Technology
• Economic
• Learning
• Capacity utilization
• Communication
• Outsourcing
• Bargaining
• Incentives scheme
• Input cost saving
• Supply chain
UNIQUE DRIVER
• Quality control
• Sales and marketing
• Customer service
• Technology and communication
• Employments skills
• Product future
• Input quality
