The document defines finance and identifies its key areas. Finance includes financial management, capital markets, and financial investment. It can be private or public. Business finance focuses on managing organizational resources and making capital budgeting, investment, and financing decisions. Within a business organization, the finance division is typically headed by the Chief Finance Officer (CFO). The CFO oversees accounting, treasury, and plays a key decision-making role regarding operating, investing, and financing decisions.

1. By : Regina M. Silverio

2. • At the end of this chapter, the students
should be able to:
1. define finance;
2. identify the different areas of finance
3. discuss finance in a business organization
4. describe the functions of a finance officer
5. state the qualifications of a finance officer

3. » Also defined as management of money, banking,
investment and credit and science of
management of money and other assets.
» It is both a science and an art of correct
application of the economic and accounting
concepts and principles that define the system,
structure and process of management, allocation
and utilization of financial resources, investment
and expenditure.

4. • FINANCIAL RESOURCES- Refer to the funds of a
business which are provided by the owner or
by the creditors.
• FINANCIAL INVESTMENTS – are resources that are
expected to provide income and achieve
appreciation or growth of the business.
• FINANCIAL EXPENDITURES – cover the operating
expenditures and the capital expenditures.

5. • Finance is broadly classified into two:
– Private Finance
– Public Finance
– 1. Business finance
2. Personal Finance

6. • Business finance is further subdivided
into the following areas:
1. Financial management
2. Capital market
3. Financial investment

7. Areas of Finance
Finance
Private
Finance
Personal
Finance
Business
Finance
Financial
Management
Capital
Market
Financial
Investment
Public
Finance
Is the management of
financial resources of private
individual, NGO, and private
organization
Is the allocation of govt. income
generated
From either taxation or borrowing
s and the
Govt. expenditure .
The income of an
Individual.
Focuses on handling and
management of financial resources of
a business organization
Focuses on capital
Budgeting decision or
Investment decision
Studies the different financial
Institutions and their functions
that provide
Assistance to both private and
public borrowers
Business decisions about the
Value and price of stocks and bonds
Portfolio analysis, market analysis,
Security analysis and behavior
Of investors.

8. FINANCE IN BUSINESS
ORGANIZATION
Board of
Directors
Chief Executive
Officer/President
Product and
Operation
Division (Vice
President for
Operation
General
Administrative
Division
(Vice President for
Administration or Human
Resource Development Officer
Finance Division
(Vice President for
Finance or Chief
Finance Officer)
Accounting
Department
(Chief Accountant, Controller,
Comptroller, or Finance Officer
Finance or
Treasury
Department
(Treasurer or Finance Officer)
Marketing
Division
(Vice President for
Marketing)

9. Board of
Directors
Chief Executive
Officer/President
Operating
Division
(Chief Operating
Officer)
Production and
Operations
Human
Resources
Marketing
Finance Division
(Chief Finance
Officer)
Accounting Treasury
FINANCE IN BUSINESS
ORGANIZATION
It is usually headed by the Chief Operating Officer (COO). The Finance Division on the other hand, is
Headed by the Chief Finance Officer (CFO) and handles the accounting and treasury functions.

10. FUNCTION OF FINANCE OFFICER
• The finance officer plays a crucial role in
the whole business organization.
• He or she acts as the wary financial traffic
officer to almost all business transactions
with monetary considerations.

11. Finance officer decision-making
function classification
• 1. Operating Decisions
• 2. Investing Decisions
• 3. Financing Decisions

12. Types of Financial Decisions Executed by the
Chief Finance Officer
Financial
Decisions of
the CFO
Operating Decisions
. Credit and Collection
Level of Inventory
Granting of discounts
Budgeting
Payment and Control of operating
expenditures
Investing Decisions
Non-current asset acquisition
Investment Portfolio
Pricing decision of stocks and
bonds
Discounted cash flow analysis in
capital budgeting
Financing Decisions
Equity financing
Debt Financing
Cost of Capital and borrowing
Short-term and long term borrowing
Interest rate