This document provides an overview of finance, including its meaning, features, scope, and the role of a finance manager. Finance is concerned with the management of money and other valuables to maintain and create economic value. The key features include channeling funds, acquiring/allocating/utilizing funds, and maximizing shareholder wealth. The scope of finance includes public, security/investment analysis, institutional, international, and financial management. The aim is to anticipate, acquire, allocate, and utilize funds to increase profitability and maximize firm value. A finance manager acts central to audit/control and strategic alliances like M&As. Their organizational structure typically includes a treasurer for financing/investments and controller for asset management/

1. BASICS
OF FINANCE

2. Made BY Johnbill Garchitorena
Jannel Yza Gunida
Beverlyn Arcilla

3. • Meaning of Finance
• Featuresof Finance
• ScopeofFinance
• Aimof Finance
• Roleof FinanceManager (Traditional+ Modern)
• Generalorganizational structureof Finance
Function
• Importanceof Financein organizationthrough an
Example

5. • Financeisa management
of moneyandother
valuables, whichcanbe
easilyconvertedinto cash.
• Financeisconcernedwith
the maintenanceand
creation of economicvalue
or wealth.
• Asciencethat describes
the management,creation
andstudyof money,
banking,credit,
investments, assetsand
liabilities.

6. Features of Finance
• Channelizingfunds-Financialsectorandfinancialmarkets
perform the essential function of channelingfundsfrom
people whohavesurplusto peoplewhohaveshortage.eg-
mutual fund
• Acquisition,Allocation& Utilization of funds-Businessneeds
to decideabout modeof raisingfunds.oncefundsare
acquired,they haveto be allocated to variousprojects and
services.businessshouldensurethat the fundsare utilized
efficiently andeffectively to achieveits objectives.
• Maximization of shareholder’swealth- Financehelpsin
defining policiesandefficient managementof working
capital in order to achieveits wealth maximization objective.

7. …continued
• Future decisionmaking-Financeisconcernedwith
future decisionsof organization.Sounddecision
makingispossibleonlythrough proper analysisof
financial needsandavailability. E.g.-capital
budgeting
• Optimal mixof funds-It isconcernedwith best
optimal mixof fundsin order to obtain desiredand
determined results.Thecompositionof fundsshould
not resultin loss.
• Investment opportunities- Investment means
utilization of moneyfor profit or returns.eg-
investmentin mutual fund or financialsecuritiesor in
land, etc.

8. Scopeof Finance
• Publicfinance- Todeal with governmental financial
problems,separateandspecializedfield of finance
hasemergedaspublicfinance with not for profit
goals.
• Securityandinvestmentanalysis-Thisarea isof
interest to individual andinstitutional investors.It
coversmainlymeasurementof riskandreturn on
investmentin securities.
• Institutional finance- It deals with issuesof capital
formation and the organizations that perform the
financingfunctionof the economy.eg- banks

9. …continued
• International finance- It studieseconomic
transactions amongnations, corporations and
individually internationally. It isconcernedwith
flowsof moneyacrossinternationalboundaries.
• Financialmanagement-Businessfirmsface
problemsdealing with acquisition of fundsand
optimum methodsof employing the funds.Thus,it
helpsfirm in seekinglow costfundsfor individual
firmsandseekprofitable business opportunities.

10. AIM OFFINANCEFUNCTION
• Anticipation of fundsneeded- Beforeanything,
there isa needto evaluate available assetsand
projects. Selectionof assetsor projectstakesplace
only after proper evaluation, whichishelpful to
anticipate the fundsrequired for financing them.
• Acquirethe anticipated funds-Theprime objective
of financefunction isto assessthe required needs
of a firm andthen arrangethe fundsneeded by
raisingfrom suitable source.

11. …continued
• Allocationandutilization of funds-Efficient
allocation andutilization of fundsisthe objective
of traditional finance function. Efficient allocation
meansinvestingfundsonprofitable projectsand
suchoperationsthat help tomaximize
shareholder’s wealth.
• Increaseprofitability- Properplanning andcontrol
of finance function aim at increasingprofitability of
the firm. It isimportant to arrangesufficient funds
at right time andonright asset.
• Maximizing firm’svalue- Everyfirm strivesto
maximizeits valuebytaking right decisions.Thus,it
isone of the mainobjectivesof finance function.

13. New role of Financemanagerin
ContemporaryScenario
• Financemanageractsascentral in audit andcontrol
practicesin an organization
• Heactsascentral in strategicallianceslike Mergers&
Acquisitions.
• Towork acrossthe functional divide of the company
andexhibit leadership skills.
• Continuousfocusandcommitment towardsvalue
creation of an organization.

15. GENERALORGANIZATIONALSTRUCTURE
OFFINANCEFUNCTION

16. • Treasurer-Heisconcernedmainlywith
financingandinvestmentactivities including
cashmanagement,relationship management
with bankers,credit ,management, portfolio
management,inventory management,
dividend disbursement,etc.
• Controller-Hisfunctionsare related to
managementandcontrolof assetslike cost
andfinancial accounting,taxation, auditing,
budgetpreparation, etc.

17. Importance of Financein a
Businessorganization through
a
n example

18. Imagine a situation…
• Youare the owner of ABCfirm andyouget 2
proposalsfor investingin a project that costsRs.5
lakhsandRs.8lakhsrespectively.Now there are
maximumthree moveswhichyoucanmakein this
situation-
1. Acceptboth
2. Reject both
3. Chooseeither of thetwo

19. Solution
• Analyzethe data of bothproposals.
• Apply several financial tools and techniqueson
the data available. Example- pay back period
technique.
• Evaluate your findings.
• Takedecision.
• Make plan for acquiring, allocating and utilisingof
funds.
• Implement plan.
• Monitor allactivities.

21. AnyQuestions?

22. Thank you !