This document discusses the finance function. It identifies the primary goals of business as earning a profit, increasing its own value, and improving community quality of life. It describes the functions of finance as allocating, procuring, and utilizing financial resources efficiently and effectively. It discusses investment portfolios and the primary activities of a financial manager as financial planning and analysis, managing a firm's assets and liabilities, and owners' equity.

1. The Finance Function
Juan Raul Relloso MBA
Ateneo de Naga University
January 27, 2014

2. Objectives:
•Identify the primary goals of business
•Discuss the functions of Finance and
investment portfolio
• Describe the primary activities of
Financial Manager

3. Primary Goals
• To earn profit
Funds are invested in a business to earn sufficient return
on investment.
ROI=Net Income (Profit-Depreciation)/Average Capital
(Equity Capital)

4. Primary Goals
• To increase its own value as an economic entity
Growth
Increase in Assets, improved production capacity, increase in
sales volume and increase in owners’ equity
Stability
Ability to continue operations despite anticipated risks in a
business

5. Primary Goals
• To improve the quality of life in the community
 Increase in Business creates chain of effects of business activities
(multiplier effect)
>business activities > sales > productions
> employment> money to spend

6. Social Responsibility of Businessmen
• Improvement of the quality of life in the
community
Improve the economy and its environment
 Refrain from increasing the price of the product in order to
contribute to the social objective of preventing inflation
 Spend to reduce pollution caused by the business to protect
and improve the environment
 Provide opportunities for employment to financially challenge
individuals to reduce poverty in the community

7. What is Business Finance?
•Business Finance “art and science of
managing the financial resources of
a business”

8. Functions of Business Finance
•Allocation of Financial Resources
Funds are channelled to activities that are considered
profitable.

9. Functions of Business Finance
•Procurement of Funds
Capital – at the least cost when it is needed
Awareness of the different sources of funds

10. Functions of Business Finance
•Efficient utilization of financial resources
Economical use
Financial resources are used for what they
have been intended.

11. Functions of Business Finance
•Effective utilization of financial resources
Refers to their use towards
 The attainment of predetermined objectives
 Requires periodic review of operation

12. Investment Portfolio
•Aggregate of assets held as investments by
an organization or individual
o stocks
o bonds
o money market placements
o real estate
o precious stones and metals

13. The Financial Manager - Primary
Activities
• Financial planning and analysis
o takes part in corporate, strategic and operational
planning
o makes projections based from accumulated data and
different options open to management
 revenue
 cost & expenses
 capital outlays
 changes in company assets, liabilities and owners equity

14. The Financial Manager - Primary
Activities
•Managing the firm’s assets
o How much must be in the form of cash, receivables, inventories, and other
current assets?
o How much must be in plant, property and equipment?
o What are the fixed assets to be acquired?
o Which of the fixed assets already owned must be modified or replaced?
o Are assets duly safeguarded? Who are accountable for them?
o How effective is the internal control system in the company?

15. The Financial Manager - Primary
Activities
•Financial planning and analysis
•Managing the firm’s assets
• Managing the firm’s liabilities and owners’
equity

16. End of Presentation