Course material

1. Fundamentals of Accountancy, Business and Management 1 powerpoint
accounting discussion question and need guidance to help me learn.
Powerpoint slide of FABM1
Requirements:
BUSINESS FINANCE As ABM students we don’t need to be a hyper-intellectual human
being like Jimmy Neutron We don’t agree with Jessie Jane’s Price Tag because ABM is all
about MONEY!
OBJECTIVES: Define business finance Be familiar with the role of business finance Know
the importance of consideration of risks in financial decision making Know the
relationship of business finance in other disciplines particularly accounting.
BUSINESS FINANCE The study of financing and investment decisions made from theory to
practice. Making of decisions about which investment the business should make.
Management of money an other valuable assets.You need to be familiar with accounting
method, investing strategies and debt management.
ROLE OF BUSINESS FINANCEFINANCING: The act of brining money into the
organization Bus. Fin. Will help us in financing and investment decision. Methods of
financing are: a. taking on debtb. credit arrangementsc. investments on real assets and
financial assets. The success and failure of business rely on thins discipline.
BUS. FIN. AND ACCTNG. ACCOUNTANTis concerned with financial record keeping,
production or periodic report, statement and analysis. FINANCIAL MANAGER only makes
decision involving finance and not to provide financial information. In a small business, an
accountant and financial manager can be one person.
FINANCIAL MANAGEMENT It starts with a plan Having cash and resources is not
enough Financial management in business is a must. FINANCIAL MANAGEMENT: Deals
with decision that supposed to maximize the value of shareholders’ wealth (shares of
stocks) Planning, controlling, directing the financial activities such activities such as
procurement and utilizations of funds. Stocks –forms of ownership in a corp.
SCOPE OF FINANCIAL MANAGEMENT1.INVESTMENT DECISION: Investment on fixed assets
(capital budgeting decision) and current assets (working capital decision)2.FINANCIAL

2. DECISION: Raising of finance from various resources 3.DIVIDEND DECISION: Decision on
net profits distribution which are;a. dividend for shareholdersb. retained profits
OBJECTIVES OF FINANCIAL MANAGEMENT1.Ensures regular and adequate supply of funds.
2.Ensures adequate returns of shareholders.3.Ensures optimum fund utilization. 4.Ensures
safety of investments –to achieve adequate rate of returns. 5.Plan a sound capital structure
–so that balance between debt to equity capital will be maintained.
FUNCTION OF FINANCIAL MANAGEMENT1. Estimation of capital requirements –such as
expected costand profits, future programs and policies to ensure increase in earning
capacity. 2. Determination of capital composition –after estimation, capital structure should
be decided, it involves short-term and long-term debt equity (D/E) analysis.
Debt / Equity AnalysisUnder the solvency financial ratio measures the amount of debt a
company uses to fund its business. (also called leveraging/risk/gearing)Ex. Total shares
value = P180,000 and Total Liabilities = P620,000 D/E ratio = 344.44% (high risk)What if:
Total shares value = P620,000 and Total Liabilities = P180,000D/E ratio = 29.03% (low
risk)
•The higher the ratio is, the more debt a business uses compared to equity•A ratio that is
too high can potentially cause problems in your small business.•The risk of defaulting on, or
being unable to repay, your debt increases as your debt-to-equity ratio rises•If you fail to
make interest payments, creditors might take your company’s assets or force you into
bankruptcy
FUNC’N. OF FIN. MGMT. (cont.)3. Choice on the sources of funds a. Issue of shares and
debentures (type of bond or debt instrument like T-bills that is not secured by physical
asset or collateral, back up only by credit worthiness and reputation of the issuer, free
risks)b. loans from banks and financial inst. c. public deposits from bonds. 4. Investment of
funds –allocating funds to profitable ventures for safety investments and regular returns.
5. Disposal of surplus –or net profit disposal, done through a. Dividend declarationb.
Retained profits –for expansion, innovation and diversification plan. 6. Management of cash
–for administrative and distributive cost. 7. Financial Control –not only procure, plan and
utilize funds but also controls finances through ratio analysis, financial forecasting, cost
profit control etc.
“BEWARE OF LITTLE EXPENSES, A SMALL LEAK WILL SINK A GREAT SHIP”Activity: Write
everything you’ve learn through a mind map.
BUSINESS FINANCE As ABM students we don’t need to be a hyper-intellectual human
being like Jimmy Neutron We don’t agree with Jessie Jane’s Price Tag because ABM is all
about MONEY!
OBJECTIVES: Define business finance Be familiar with the role of business finance Know
the importance of consideration of risks in financial decision making Know the
relationship of business finance in other disciplines particularly accounting.
BUSINESS FINANCE The study of financing and investment decisions made from theory to

3. practice. Making of decisions about which investment the business should make.
Management of money an other valuable assets.You need to be familiar with accounting
method, investing strategies and debt management.
ROLE OF BUSINESS FINANCEFINANCING: The act of brining money into the
organization Bus. Fin. Will help us in financing and investment decision. Methods of
financing are: a. taking on debtb. credit arrangementsc. investments on real assets and
financial assets. The success and failure of business rely on thins discipline.
BUS. FIN. AND ACCTNG. ACCOUNTANTis concerned with financial record keeping,
production or periodic report, statement and analysis. FINANCIAL MANAGER only makes
decision involving finance and not to provide financial information. In a small business, an
accountant and financial manager can be one person.
FINANCIAL MANAGEMENT It starts with a plan Having cash and resources is not
enough Financial management in business is a must. FINANCIAL MANAGEMENT: Deals
with decision that supposed to maximize the value of shareholders’ wealth (shares of
stocks) Planning, controlling, directing the financial activities such activities such as
procurement and utilizations of funds. Stocks –forms of ownership in a corp.
SCOPE OF FINANCIAL MANAGEMENT1.INVESTMENT DECISION: Investment on fixed assets
(capital budgeting decision) and current assets (working capital decision)2.FINANCIAL
DECISION: Raising of finance from various resources 3.DIVIDEND DECISION: Decision on
net profits distribution which are;a. dividend for shareholdersb. retained profits
OBJECTIVES OF FINANCIAL MANAGEMENT1.Ensures regular and adequate supply of funds.
2.Ensures adequate returns of shareholders.3.Ensures optimum fund utilization. 4.Ensures
safety of investments –to achieve adequate rate of returns. 5.Plan a sound capital structure
–so that balance between debt to equity capital will be maintained.
FUNCTION OF FINANCIAL MANAGEMENT1. Estimation of capital requirements –such as
expected costand profits, future programs and policies to ensure increase in earning
capacity. 2. Determination of capital composition –after estimation, capital structure should
be decided, it involves short-term and long-term debt equity (D/E) analysis.
Debt / Equity AnalysisUnder the solvency financial ratio measures the amount of debt a
company uses to fund its business. (also called leveraging/risk/gearing)Ex. Total shares
value = P180,000 and Total Liabilities = P620,000 D/E ratio = 344.44% (high risk)What if:
Total shares value = P620,000 and Total Liabilities = P180,000D/E ratio = 29.03% (low
risk)
•The higher the ratio is, the more debt a business uses compared to equity•A ratio that is
too high can potentially cause problems in your small business.•The risk of defaulting on, or
being unable to repay, your debt increases as your debt-to-equity ratio rises•If you fail to
make interest payments, creditors might take your company’s assets or force you into
bankruptcy
FUNC’N. OF FIN. MGMT. (cont.)3. Choice on the sources of funds a. Issue of shares and
debentures (type of bond or debt instrument like T-bills that is not secured by physical
asset or collateral, back up only by credit worthiness and reputation of the issuer, free
risks)b. loans from banks and financial inst. c. public deposits from bonds. 4. Investment of
funds –allocating funds to profitable ventures for safety investments and regular returns.

4. 5. Disposal of surplus –or net profit disposal, done through a. Dividend declarationb.
Retained profits –for expansion, innovation and diversification plan. 6. Management of cash
–for administrative and distributive cost. 7. Financial Control –not only procure, plan and
utilize funds but also controls finances through ratio analysis, financial forecasting, cost
profit control etc.
“BEWARE OF LITTLE EXPENSES, A SMALL LEAK WILL SINK A GREAT SHIP”Activity: Write
everything you’ve learn through a mind map.