SlideShare a Scribd company logo
WHAT IS FINANCE?
•FINANCE IS ABOUT THE BOTTOM LINE OF BUSINESS
ACTIVITIES
EVERY BUSINESS IS A PROCESS OF ACQUIRING AND
DISPOSING ASSETS:
•– REAL ASSETS (TANGIBLE AND INTANGIBLE)
•– FINANCIAL ASSETS
TWO OBJECTIVES OF BUSINESS:
•– GROW WEALTH
•– USE WEALTH (ASSETS) TO BEST MEET ECONOMIC
NEEDS
•FINANCIALLY, A BUSINESS DECISION REDUCES TO
VALUATION OF ASSETS.
• VALUATION IS THE CENTRAL ISSUE OF FINANCE.
CASH FLOW OF A FIRM
•CASH RAISED FROM INVESTORS BY SELLING
FINANCIAL ASSETS.
• CASH INVESTED IN REAL ASSETS (TANGIBLE AND
INTANGIBLE).
•CASH GENERATED BY OPERATIONS
• CASH REINVESTED
•CASH RETURNED TO INVESTORS. – MANDATORY
(E.G. LOAN PAYMENTS) – DISCRETIONARY (E.G.
DIVIDENDS)
TASK OF FINANCIAL MANAGER
•TO MAKE SOUND FINANCIAL DECISIONS, WE NEED
TO KNOW HOW TO VALUE ASSETS.
INVESTMENT DECISION:
•HOW REAL ASSETS ARE VALUED.
FINANCING AND PAYOUT:
•HOW CORPORATE SECURITIES ARE VALUED.
• RISK MANAGEMENT:
•HOW FINANCIAL CONTRACTS ARE VALUED.
VALUATION OF ASSETS
•EACH ASSET IS DEFINED BY ITS CASH FLOW (CF).
IMPORTANT CHARACTERISTICS OF A CASH
FLOW
•TIME: TIME VALUE OF MONEY.
EXAMPLE: $1,000 TODAY VS. $1,000 NEXT YEAR.
•RISK: RISK PREMIUM.
EXAMPLE. $1,000 FOR SURE VS. $0 AND $2,000
WITH EQUAL ODDS.
•TIME AND UNCERTAINTY ARE TWO KEY ELEMENTS IN
FINANCE.
OPPORTUNITY COST OF CAPITAL
•OPPORTUNITY COST OF CAPITAL IS THE EXPECTED
RATE OF RETURN OFFERED BY EQUIVALENT
INVESTMENTS IN FINANCIAL MARKETS.
ROLE OF FINANCIAL MARKETS
FINANCIAL MARKETS
•WHERE FINANCIAL ASSETS ARE TRADED
MONEY MARKETS
•SHORT-TERM DEBT SECURITIES
CAPITAL MARKETS
•LONG-TERM SECURITIES
DERIVATIVES
•SECURITIES WITH PAYOFFS TIED TO OTHER PRICES
FINANCIAL INTERMEDIARIES
•OWN MOSTLY FINANCIAL ASSETS
CORPORATIONS
•OWN MOSTLY REAL ASSETS
INDIVIDUALS
•OWN BOTH REAL AND FINANCIAL ASSETS
FUNCTIONS OF FINANCIAL MARKETS
•ALLOCATING RESOURCES
COMMUNICATING INFORMATION.
•MARKET PRICES REFLECT AVAILABLE
INFORMATION.
Introduction to Basic Finance

More Related Content

What's hot

Internationalcapitalbudgeting slides-110216223158-phpapp01
Internationalcapitalbudgeting slides-110216223158-phpapp01Internationalcapitalbudgeting slides-110216223158-phpapp01
Internationalcapitalbudgeting slides-110216223158-phpapp01
Akshay Karnatak
 
Financial management
Financial managementFinancial management
Financial management
Byju Antony
 
Presentasi eltm
Presentasi eltmPresentasi eltm
Presentasi eltm
Lodya Sesriyani
 
Sub-Accounts of the Balance of Payments
Sub-Accounts of the Balance of PaymentsSub-Accounts of the Balance of Payments
Sub-Accounts of the Balance of Payments
Sandrea Butcher
 
Cash flow forecasting
Cash flow forecastingCash flow forecasting
Cash flow forecasting
Guerillateacher
 
International Financial management
International Financial management International Financial management
International Financial management
SherazAhmed118
 
Unit 7 working capital management
Unit 7   working capital managementUnit 7   working capital management
Unit 7 working capital management
Ashish Gupta
 
Accounting standard-11
Accounting standard-11Accounting standard-11
Accounting standard-11
Chitra Mudaliyar
 
Cash flow analysis
Cash flow analysisCash flow analysis
Cash flow analysis
Ganesha Moorthy K
 
Nedbank june 2011 thayn n_iemand
Nedbank june 2011 thayn n_iemandNedbank june 2011 thayn n_iemand
Nedbank june 2011 thayn n_iemand
thaynniemand
 
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTINGFINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Trinity Dwarka
 
Il Rendiconto dei Flussi di Cassa
Il Rendiconto dei Flussi di CassaIl Rendiconto dei Flussi di Cassa
Il Rendiconto dei Flussi di Cassa
Manager.it
 
Balance of payment
Balance of paymentBalance of payment

What's hot (13)

Internationalcapitalbudgeting slides-110216223158-phpapp01
Internationalcapitalbudgeting slides-110216223158-phpapp01Internationalcapitalbudgeting slides-110216223158-phpapp01
Internationalcapitalbudgeting slides-110216223158-phpapp01
 
Financial management
Financial managementFinancial management
Financial management
 
Presentasi eltm
Presentasi eltmPresentasi eltm
Presentasi eltm
 
Sub-Accounts of the Balance of Payments
Sub-Accounts of the Balance of PaymentsSub-Accounts of the Balance of Payments
Sub-Accounts of the Balance of Payments
 
Cash flow forecasting
Cash flow forecastingCash flow forecasting
Cash flow forecasting
 
International Financial management
International Financial management International Financial management
International Financial management
 
Unit 7 working capital management
Unit 7   working capital managementUnit 7   working capital management
Unit 7 working capital management
 
Accounting standard-11
Accounting standard-11Accounting standard-11
Accounting standard-11
 
Cash flow analysis
Cash flow analysisCash flow analysis
Cash flow analysis
 
Nedbank june 2011 thayn n_iemand
Nedbank june 2011 thayn n_iemandNedbank june 2011 thayn n_iemand
Nedbank june 2011 thayn n_iemand
 
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTINGFINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
 
Il Rendiconto dei Flussi di Cassa
Il Rendiconto dei Flussi di CassaIl Rendiconto dei Flussi di Cassa
Il Rendiconto dei Flussi di Cassa
 
Balance of payment
Balance of paymentBalance of payment
Balance of payment
 

Similar to Introduction to Basic Finance

introductiontofinancialmanagement-170104060039.pptx
introductiontofinancialmanagement-170104060039.pptxintroductiontofinancialmanagement-170104060039.pptx
introductiontofinancialmanagement-170104060039.pptx
SoujanyaLk1
 
Introduction to financial management
Introduction to financial managementIntroduction to financial management
Introduction to financial management
Visakhapatnam
 
Managerial economics
Managerial economicsManagerial economics
Managerial economics
City Union Bank Ltd
 
Financial Planning
Financial PlanningFinancial Planning
Financial Planning
Sneha Khanna
 
Basic finance
Basic financeBasic finance
Basic finance
jb garchi
 
workingcapitalmgt-090513064636-phpapp01.ppt
workingcapitalmgt-090513064636-phpapp01.pptworkingcapitalmgt-090513064636-phpapp01.ppt
workingcapitalmgt-090513064636-phpapp01.ppt
drluminajulier
 
Financial management
Financial managementFinancial management
Financial management
sbkkpr2018
 
Introduction to corporate finance
Introduction to corporate financeIntroduction to corporate finance
Introduction to corporate finance
University of Balochistan
 
Language of business
Language of businessLanguage of business
L02 definition of fm
L02 definition of fmL02 definition of fm
L02 definition of fm
Noorulhadi Qureshi
 
Introduction to financial management
Introduction to financial managementIntroduction to financial management
Introduction to financial management
Srinivas Methuku
 
Define cost of capital
Define cost of capitalDefine cost of capital
Define cost of capital
Divya Bhardwaj
 
WCM and Dividend Decision
WCM and Dividend DecisionWCM and Dividend Decision
WCM and Dividend Decision
Suku Thomas Samuel
 
Cash Flow Statement (AS -3)
Cash Flow Statement (AS -3)Cash Flow Statement (AS -3)
Cash Flow Statement (AS -3)
Sai Youdhister
 
Punit & aaditya
Punit & aadityaPunit & aaditya
Punit & aaditya
HiT-Man
 
Introduction to financial management and financial markets
Introduction to financial management and financial markets Introduction to financial management and financial markets
Introduction to financial management and financial markets
sonarevankar
 
Accounting 1
Accounting 1Accounting 1
Accounting 1
Accounting 1Accounting 1
Accounting 1
Manoj Rathod
 
City Realty Vinings V8
City Realty Vinings V8City Realty Vinings V8
City Realty Vinings V8
laurakcity
 
1 Introduction to Finance .pptx
1 Introduction to Finance .pptx1 Introduction to Finance .pptx
1 Introduction to Finance .pptx
samiullah440888
 

Similar to Introduction to Basic Finance (20)

introductiontofinancialmanagement-170104060039.pptx
introductiontofinancialmanagement-170104060039.pptxintroductiontofinancialmanagement-170104060039.pptx
introductiontofinancialmanagement-170104060039.pptx
 
Introduction to financial management
Introduction to financial managementIntroduction to financial management
Introduction to financial management
 
Managerial economics
Managerial economicsManagerial economics
Managerial economics
 
Financial Planning
Financial PlanningFinancial Planning
Financial Planning
 
Basic finance
Basic financeBasic finance
Basic finance
 
workingcapitalmgt-090513064636-phpapp01.ppt
workingcapitalmgt-090513064636-phpapp01.pptworkingcapitalmgt-090513064636-phpapp01.ppt
workingcapitalmgt-090513064636-phpapp01.ppt
 
Financial management
Financial managementFinancial management
Financial management
 
Introduction to corporate finance
Introduction to corporate financeIntroduction to corporate finance
Introduction to corporate finance
 
Language of business
Language of businessLanguage of business
Language of business
 
L02 definition of fm
L02 definition of fmL02 definition of fm
L02 definition of fm
 
Introduction to financial management
Introduction to financial managementIntroduction to financial management
Introduction to financial management
 
Define cost of capital
Define cost of capitalDefine cost of capital
Define cost of capital
 
WCM and Dividend Decision
WCM and Dividend DecisionWCM and Dividend Decision
WCM and Dividend Decision
 
Cash Flow Statement (AS -3)
Cash Flow Statement (AS -3)Cash Flow Statement (AS -3)
Cash Flow Statement (AS -3)
 
Punit & aaditya
Punit & aadityaPunit & aaditya
Punit & aaditya
 
Introduction to financial management and financial markets
Introduction to financial management and financial markets Introduction to financial management and financial markets
Introduction to financial management and financial markets
 
Accounting 1
Accounting 1Accounting 1
Accounting 1
 
Accounting 1
Accounting 1Accounting 1
Accounting 1
 
City Realty Vinings V8
City Realty Vinings V8City Realty Vinings V8
City Realty Vinings V8
 
1 Introduction to Finance .pptx
1 Introduction to Finance .pptx1 Introduction to Finance .pptx
1 Introduction to Finance .pptx
 

Recently uploaded

Tata Group Dials Taiwan for Its Chipmaking Ambition in Gujarat’s Dholera
Tata Group Dials Taiwan for Its Chipmaking Ambition in Gujarat’s DholeraTata Group Dials Taiwan for Its Chipmaking Ambition in Gujarat’s Dholera
Tata Group Dials Taiwan for Its Chipmaking Ambition in Gujarat’s Dholera
Avirahi City Dholera
 
The Influence of Marketing Strategy and Market Competition on Business Perfor...
The Influence of Marketing Strategy and Market Competition on Business Perfor...The Influence of Marketing Strategy and Market Competition on Business Perfor...
The Influence of Marketing Strategy and Market Competition on Business Perfor...
Adam Smith
 
Creative Web Design Company in Singapore
Creative Web Design Company in SingaporeCreative Web Design Company in Singapore
Creative Web Design Company in Singapore
techboxsqauremedia
 
3 Simple Steps To Buy Verified Payoneer Account In 2024
3 Simple Steps To Buy Verified Payoneer Account In 20243 Simple Steps To Buy Verified Payoneer Account In 2024
3 Simple Steps To Buy Verified Payoneer Account In 2024
SEOSMMEARTH
 
How MJ Global Leads the Packaging Industry.pdf
How MJ Global Leads the Packaging Industry.pdfHow MJ Global Leads the Packaging Industry.pdf
How MJ Global Leads the Packaging Industry.pdf
MJ Global
 
Anny Serafina Love - Letter of Recommendation by Kellen Harkins, MS.
Anny Serafina Love - Letter of Recommendation by Kellen Harkins, MS.Anny Serafina Love - Letter of Recommendation by Kellen Harkins, MS.
Anny Serafina Love - Letter of Recommendation by Kellen Harkins, MS.
AnnySerafinaLove
 
Taurus Zodiac Sign: Unveiling the Traits, Dates, and Horoscope Insights of th...
Taurus Zodiac Sign: Unveiling the Traits, Dates, and Horoscope Insights of th...Taurus Zodiac Sign: Unveiling the Traits, Dates, and Horoscope Insights of th...
Taurus Zodiac Sign: Unveiling the Traits, Dates, and Horoscope Insights of th...
my Pandit
 
The 10 Most Influential Leaders Guiding Corporate Evolution, 2024.pdf
The 10 Most Influential Leaders Guiding Corporate Evolution, 2024.pdfThe 10 Most Influential Leaders Guiding Corporate Evolution, 2024.pdf
The 10 Most Influential Leaders Guiding Corporate Evolution, 2024.pdf
thesiliconleaders
 
-- June 2024 is National Volunteer Month --
-- June 2024 is National Volunteer Month ---- June 2024 is National Volunteer Month --
-- June 2024 is National Volunteer Month --
NZSG
 
Training my puppy and implementation in this story
Training my puppy and implementation in this storyTraining my puppy and implementation in this story
Training my puppy and implementation in this story
WilliamRodrigues148
 
Hamster Kombat' Telegram Game Surpasses 100 Million Players—Token Release Sch...
Hamster Kombat' Telegram Game Surpasses 100 Million Players—Token Release Sch...Hamster Kombat' Telegram Game Surpasses 100 Million Players—Token Release Sch...
Hamster Kombat' Telegram Game Surpasses 100 Million Players—Token Release Sch...
SOFTTECHHUB
 
Call 8867766396 Satta Matka Dpboss Matka Guessing Satta batta Matka 420 Satta...
Call 8867766396 Satta Matka Dpboss Matka Guessing Satta batta Matka 420 Satta...Call 8867766396 Satta Matka Dpboss Matka Guessing Satta batta Matka 420 Satta...
Call 8867766396 Satta Matka Dpboss Matka Guessing Satta batta Matka 420 Satta...
bosssp10
 
Recruiting in the Digital Age: A Social Media Masterclass
Recruiting in the Digital Age: A Social Media MasterclassRecruiting in the Digital Age: A Social Media Masterclass
Recruiting in the Digital Age: A Social Media Masterclass
LuanWise
 
buy old yahoo accounts buy yahoo accounts
buy old yahoo accounts buy yahoo accountsbuy old yahoo accounts buy yahoo accounts
buy old yahoo accounts buy yahoo accounts
Susan Laney
 
Structural Design Process: Step-by-Step Guide for Buildings
Structural Design Process: Step-by-Step Guide for BuildingsStructural Design Process: Step-by-Step Guide for Buildings
Structural Design Process: Step-by-Step Guide for Buildings
Chandresh Chudasama
 
Understanding User Needs and Satisfying Them
Understanding User Needs and Satisfying ThemUnderstanding User Needs and Satisfying Them
Understanding User Needs and Satisfying Them
Aggregage
 
Authentically Social Presented by Corey Perlman
Authentically Social Presented by Corey PerlmanAuthentically Social Presented by Corey Perlman
Authentically Social Presented by Corey Perlman
Corey Perlman, Social Media Speaker and Consultant
 
amptalk_RecruitingDeck_english_2024.06.05
amptalk_RecruitingDeck_english_2024.06.05amptalk_RecruitingDeck_english_2024.06.05
amptalk_RecruitingDeck_english_2024.06.05
marketing317746
 
一比一原版新西兰奥塔哥大学毕业证(otago毕业证)如何办理
一比一原版新西兰奥塔哥大学毕业证(otago毕业证)如何办理一比一原版新西兰奥塔哥大学毕业证(otago毕业证)如何办理
一比一原版新西兰奥塔哥大学毕业证(otago毕业证)如何办理
taqyea
 
Observation Lab PowerPoint Assignment for TEM 431
Observation Lab PowerPoint Assignment for TEM 431Observation Lab PowerPoint Assignment for TEM 431
Observation Lab PowerPoint Assignment for TEM 431
ecamare2
 

Recently uploaded (20)

Tata Group Dials Taiwan for Its Chipmaking Ambition in Gujarat’s Dholera
Tata Group Dials Taiwan for Its Chipmaking Ambition in Gujarat’s DholeraTata Group Dials Taiwan for Its Chipmaking Ambition in Gujarat’s Dholera
Tata Group Dials Taiwan for Its Chipmaking Ambition in Gujarat’s Dholera
 
The Influence of Marketing Strategy and Market Competition on Business Perfor...
The Influence of Marketing Strategy and Market Competition on Business Perfor...The Influence of Marketing Strategy and Market Competition on Business Perfor...
The Influence of Marketing Strategy and Market Competition on Business Perfor...
 
Creative Web Design Company in Singapore
Creative Web Design Company in SingaporeCreative Web Design Company in Singapore
Creative Web Design Company in Singapore
 
3 Simple Steps To Buy Verified Payoneer Account In 2024
3 Simple Steps To Buy Verified Payoneer Account In 20243 Simple Steps To Buy Verified Payoneer Account In 2024
3 Simple Steps To Buy Verified Payoneer Account In 2024
 
How MJ Global Leads the Packaging Industry.pdf
How MJ Global Leads the Packaging Industry.pdfHow MJ Global Leads the Packaging Industry.pdf
How MJ Global Leads the Packaging Industry.pdf
 
Anny Serafina Love - Letter of Recommendation by Kellen Harkins, MS.
Anny Serafina Love - Letter of Recommendation by Kellen Harkins, MS.Anny Serafina Love - Letter of Recommendation by Kellen Harkins, MS.
Anny Serafina Love - Letter of Recommendation by Kellen Harkins, MS.
 
Taurus Zodiac Sign: Unveiling the Traits, Dates, and Horoscope Insights of th...
Taurus Zodiac Sign: Unveiling the Traits, Dates, and Horoscope Insights of th...Taurus Zodiac Sign: Unveiling the Traits, Dates, and Horoscope Insights of th...
Taurus Zodiac Sign: Unveiling the Traits, Dates, and Horoscope Insights of th...
 
The 10 Most Influential Leaders Guiding Corporate Evolution, 2024.pdf
The 10 Most Influential Leaders Guiding Corporate Evolution, 2024.pdfThe 10 Most Influential Leaders Guiding Corporate Evolution, 2024.pdf
The 10 Most Influential Leaders Guiding Corporate Evolution, 2024.pdf
 
-- June 2024 is National Volunteer Month --
-- June 2024 is National Volunteer Month ---- June 2024 is National Volunteer Month --
-- June 2024 is National Volunteer Month --
 
Training my puppy and implementation in this story
Training my puppy and implementation in this storyTraining my puppy and implementation in this story
Training my puppy and implementation in this story
 
Hamster Kombat' Telegram Game Surpasses 100 Million Players—Token Release Sch...
Hamster Kombat' Telegram Game Surpasses 100 Million Players—Token Release Sch...Hamster Kombat' Telegram Game Surpasses 100 Million Players—Token Release Sch...
Hamster Kombat' Telegram Game Surpasses 100 Million Players—Token Release Sch...
 
Call 8867766396 Satta Matka Dpboss Matka Guessing Satta batta Matka 420 Satta...
Call 8867766396 Satta Matka Dpboss Matka Guessing Satta batta Matka 420 Satta...Call 8867766396 Satta Matka Dpboss Matka Guessing Satta batta Matka 420 Satta...
Call 8867766396 Satta Matka Dpboss Matka Guessing Satta batta Matka 420 Satta...
 
Recruiting in the Digital Age: A Social Media Masterclass
Recruiting in the Digital Age: A Social Media MasterclassRecruiting in the Digital Age: A Social Media Masterclass
Recruiting in the Digital Age: A Social Media Masterclass
 
buy old yahoo accounts buy yahoo accounts
buy old yahoo accounts buy yahoo accountsbuy old yahoo accounts buy yahoo accounts
buy old yahoo accounts buy yahoo accounts
 
Structural Design Process: Step-by-Step Guide for Buildings
Structural Design Process: Step-by-Step Guide for BuildingsStructural Design Process: Step-by-Step Guide for Buildings
Structural Design Process: Step-by-Step Guide for Buildings
 
Understanding User Needs and Satisfying Them
Understanding User Needs and Satisfying ThemUnderstanding User Needs and Satisfying Them
Understanding User Needs and Satisfying Them
 
Authentically Social Presented by Corey Perlman
Authentically Social Presented by Corey PerlmanAuthentically Social Presented by Corey Perlman
Authentically Social Presented by Corey Perlman
 
amptalk_RecruitingDeck_english_2024.06.05
amptalk_RecruitingDeck_english_2024.06.05amptalk_RecruitingDeck_english_2024.06.05
amptalk_RecruitingDeck_english_2024.06.05
 
一比一原版新西兰奥塔哥大学毕业证(otago毕业证)如何办理
一比一原版新西兰奥塔哥大学毕业证(otago毕业证)如何办理一比一原版新西兰奥塔哥大学毕业证(otago毕业证)如何办理
一比一原版新西兰奥塔哥大学毕业证(otago毕业证)如何办理
 
Observation Lab PowerPoint Assignment for TEM 431
Observation Lab PowerPoint Assignment for TEM 431Observation Lab PowerPoint Assignment for TEM 431
Observation Lab PowerPoint Assignment for TEM 431
 

Introduction to Basic Finance