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UNDERSTANDING FINANCE.pptx
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- 3. At the endof the lesson, the learners are expected to: define finance. identify the different areas of finance. categorize the persons involved in a business organization through organizational chart; and state the qualifications of a finance officer through acrostic
- 4. WHAT IS FINANCE? Financeas the management of money, banking, investments, and credit. –American Heritage Desk Dictionary Science of management of money and other assets. MONEY
- 5. Finance is botha 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, investments, and expenditures.
- 6. Economics Accounting Finance Concerned with the utilizationof scarce resources to satisfy human needs and wants Art of recording business transactions and deals with the preparation of financial statements.
- 7. AREAS OF FINANCE Financeis broadly classified into two: Private finance -business finance -personal finance Public finance
- 8. AREAS OF FINANCE Businessfinance is further subdivided into: Financial management Capital market Financial investment
- 9. FINANCE Private Finance Personal Finance Business Finance Financial Management Capital Market Financial Investments Public Finance Private Finance isthe management of financial resources of private individuals, non governmental organizations, and private organization. Public Finance is the allocation of government income generated from either taxation or borrowings and the government expenditure. Personal Finance income is allocated based on the individuals personal needs. Business Finance focuses on the handling and management of financial resources of a business organization. Financial Management focuses on capital budgeting decision or investment decision. Capital Market studies the different financial institutions and their functions to both private and public borrowings. Financial Investments includes business decisions about the value and price of stocks, bonds, portfolio analysis, market analysis and the likes.
- 10. FINANCE IN A BUSINESSORGANIZATION Functional Divisions Production and operation division General administrative or human resource division Finance division Marketing division
- 11. BOARD OF DIRECTORS Chief Executive Officer/President Productand Operation Division General Administrative Division Finance Division Accounting Department Finance or Treasury Department Marketing Division
- 12. FUNCTIONS OF AFINANCE OFFICER The finance officer is heavily engaged in making decisions for the business to attain its objectives. OPERATIONG DECISIONS INVESTING DECISIONS FINANCING DECISIONS
- 13. Financial Decisions of the CFO Operating Decisions Investing Decisions Financing Decisions Credit and Collection Level of Inventory Granting of Discounts Budgeting Payment and Control of Operating Expenditure Daily Operating Decisions Non Current asset acquisition Investment Portfolio Pricing Decision of stocks and bonds Discounted Cash Flow analysis in capital budgeting Equity Financing Debt Financing Cost of Capital and borrowing Short term and long term borrowings Interest rate
- 14. QUALIFICATIONS OF A FINANCEOFFICER Possesses sound knowledge of accounting and economic concepts and principles Has profound understanding of operation science, statistics, and marketing research
- 15. QUALIFICATIONS OF A FINANCEOFFICER Has gained technical experience in finance and provided professional judgement Has good communication skills in both oral and written forms
- 16. QUALIFICATIONS OF A FINANCEOFFICER Has impressive relationship with banks and other financial institutions Has outstanding relationship within the business and among other functional areas
- 17. QUALIFICATIONS OF A FINANCEOFFICER Ethically and morally upright and socially responsible.