THE COLLEGE OF MAASIN
“NISI DOMINUS FRUSTRA”
TUNGA-TUNGA, MAASIN CITY
Business Finance
Subject Instructor: Zhemae P. Ramirez
[email protected]This course deals with the fundamental principles, tools, and techniques of the financial operation involved in the management of
business enterprises. It covers the basic framework and tools for financial analysis and financial planning and control, and
introduces basic concepts and principles needed in making investment and financing decisions. Introduction to investments and
personal finance are also covered in the course. Using the dual-learning approach of theory and application, each chapter and
module engages the learners to explore all stages of the learning process from knowledge, analysis, evaluation, and application to
preparation and development of financial plans and programs suited for a small business.
Module 1: Introduction to Financial Management
CONTENT STANDARD
The learners demonstrate and have an understanding of the definition of finance, the activities of the financial manager, and
financial institutions and markets
PERFORMANCE STANDARD
The learners are able to:
1. define Finance
2. describe who are responsible for financial management within an organization
3. describe the primary activities of the financial manager
4. describe how the financial manager helps in achieving the goal of the organization
5. describe the role of financial institutions and markets
LEARNING COMPETENCIES
The learner will be able to:
1. explain the major role of financial management and the different individuals involved
2. distinguish a financial institution from financial instrument and financial market
3. explain the flow of funds within an organization – through and from the enterprise—and the role of the financial manager
What is Finance?
The study of how individuals or businesses evaluate investment opportunities, business proposals, and business projects, and
raise capital to fund them.
What is Financial Management?
The efficient and effective management of funds.
What is a financial institution?
is a financial Intermediary, meant to be in the middle, to be the go between, or link between the depositors who have the money
and the borrower who need the money.
Flow of money begins with the individual who deposits
in the bank (a financial institution). This depositor
opens up a bank account and earns an interest from
this account. In turn, these funds are lent by the banks
to businesses, the borrowers, who either start-up a
new project, a new line of products, or merely expand
operations. As the business earn profits, the borrower
of the funds is able to pay interest on the loan, and
the depositor receives an interest on his bank account.
Depositor- is the person who has the money and deposits it in a savings account with a bank.
Borrower- the one who needs the funds
What is a Financial Instrument?
Are the tools that help a business’ daily operations. These tools help the finance manager handle his cash.
Examples of Financial Instrument:
Money Market
1. treasury Bills
2. Commercial Papers
3. Money Market Funds
4. Consumer Credit, credit card debt
Long Term Debt
1. Treasury notes and bonds
2. Federal Agency Debt
3. Municipal Bonds, Local Gov’t Bonds
4. Corporate Bonds
Stock- a type of security that signifies ownership in a corporation, and represents a claim on part of corporation’s assets and
earnings.
1. Preferred Stock
2. Common Stock
Why invest in stocks?
-Stock investor are part-owners
-Stock investors benefit from growth potential
-Stock investors receive cash
Different kinds of Banks:
1.Thrift bank- usually cater the country banks or rural areas
2. Commercial bank- their transactions are usually many but small
3. Universal bank- lend to multinational companies or companies with global presence. They are still commercial banks but their
clientele are mostly large corporations.
4. Investment bank- are known to successfully raise funds for big corporations and governments.
Different kinds of Non-Banks:
1. Leasing Companies
2. Investment Companies
3. Mutual funds
4. Insurance companies
5. Private equity funds
Role of the Financial Manager on the Flow of Money
we know that the goal of finance is to MAXIMIZE PROFITS. Therefore, it is expected that the financial manager invests this money
in projects that are worthwhile.
ACTIVITIES
1. Discuss the flow of money. (10 pts)
2. Give a brief discussion on how stocks work (10 pts)
3. what is Financial Management? And how is this important to you as a student? (10 pts)
4. what is the role of a Financial Institution? (5 pts)
5. Give brief definition of at least 5 Financial Instrument. 5 pts each
60 items.
GOD BLESS!
