The success of a business depends on effective financial management

1. THE
IMPORTANCE
OF FINANCE
IN BUSINESS
Prepared by: KYRLE FAYE G. ORTEGA

2. What is Finance?
- is the available cash that a
person, an organization,
government can use
- is defined as the management of
money and includes activities
such as investing, borrowing,
lending, budgeting, saving, and
forecasting

3. Financial Management
 It is an integral part of
business organization
 It is concerned with the
effective utilization of
funds
 It helps the organization
determine what to spend,
where to spend and when
to spend

4. The two basic objectives of
financial management:
1. Profit Maximization
2. Wealth Maximization

5. OBJECTIVES
PROFIT
WEALTH

6. 1. PROFIT MAXIMIZATION
the traditional approach
that aims to maximize
profit of the business

7. Important features of Profit
Maximization
- It can lead to maximize the
business operations
- Profit is the parameter in
measuring the efficiency of
business
- Helps to reduce the risk of the
business

8. 2. WEALTH MAXIMIZATION
is one of the modern approaches
which involves latest innovations
and improvement in the field of
business
it is superior than profit
maximization
it ensures the economic interest of
the society
provides efficient allocation of
resources

9. 6 reasons
why Finance
is important
in today’s
business

10. 1. Generate Money
 It is often said that “you need
money to make money”
2. Organize Operations
 If a business does not carefully
manage its income and expenditure,
as well as monitoring funds, it will
become difficult to allocate funds
effectively, rendering the business
unable to trade

11. 3. Manage Cash Flow
 For an organization to be carried on
with their day to day processing, it
becomes imperative to manage the cash
flow
4. Strategize Funding
 You need to keep track of the
expenses, monitor the frequency and
then decide how to spend and how
much to spend

12. 5. Outline Long Term Goals
 Organizations work to grow and scale
their business high, to do so, it is
important to have significant future goals
that the organization aims to accomplish in
a span of five or ten years.
6. To Sustain Economic
Downturn
 to ensure that your business has the
right contingency plans in place no matter
what happens

13. It is clear that as much as
finance is important for your
business, so is the
management. Right from
collecting funds to allocating
and spending them,
organizational leaders must
have a transparent view of all
financial undertakings within
their organization and likewise,
indulge in planning for efficient
utilization of available
resources.

14. Thank you!