Introduction to
Financial Management
MS. MA. EDILYN D. CHIAO
Faculty, Senior High School Division
Elizabeth Seton School – Las Pinas Campus
Lesson Objectives
ü Define finance
ü Describe who are responsible for financial management
ü within an organization
ü Describe the primary activities of the financial manager
ü Describe how the financial manager helps in achieving the
goal of the organization
ü Describe the role of a financial institutions and markets
Reflective Question
Why did you choose
ABM strand?
Class Activity
How much is your daily allowance?
01 If not given daily, how much is your average allowance per day?
How much money do you spend daily?
02 List down all the items you spend money on with description and peso
Amount.
Compute for the balance of your allowance.
03 Deduct the expenses you listed from your daily allowance
If the answer in No. 3 is positive,
04 What do you do with the money left?
If the answer in No. 3 is negative,
05 Where do you get additional money?
Situational Analysis
Juan Abe is a senior high school student. While studying he works
as a
part-time barista near his home. He is earnings to help his parents
pay his college tuition fees. After six months, he was able to save
Php 30,000. He has 3 options to make his money grow: to deposit
his money in a bank; to make his money available for borrowing;
and to infuse his money as an additional capital in their food cart
business. If you were Juan, what would you do to make it grow?
What would you consider in making such a decision?
Class Discussion
Money = Choice = Freedom
= Ability to Fulfill Your
Dreams and Purpose.
Do you know them?
Vocabulary
FINANCE:
² The science and the art of managing money (Gitman & Zutter, 2012)
² The study on how the players in a financial system acquire, spend,
manage, and make other sound financial decisions concerning money
and other financial resources.
Looking back: Class Activity
Vocabulary
MONEY:
² Anything generally accepted as a mans of paying for goods and ser
vices and for paying off debts or liabilities.
Medium of Exchange Store of Value Standard of Value
an intermediary instrument or the function of an asset that can be an agreed-upon worth for a
system used to facilitate the saved, retrieved and exchanged at transaction in a country's
sale, purchase or trade of a later time, and be predictably us medium of exchange, such
goods between parties. eful when retrieved.
as the Philippine peso.
Why study Finance?
To be able to manage money or financial resources
Economics underscores that a resource is something that is scarce and
01 have to be managed properly to maximize their use.
To be able to make sound decisions.
Decisions being made by individuals, businesses, and governments affect
02 the entire economy. Due to this, they must be able to make decisions that
increase the value of their stakeholders.
To be able to arrive at sound personal and business investment
03 decisions.
Decisions have to me made with prudence which requires careful assessment
04 of situations, available alternatives, and a sensitivity analysis highlighting
optimistic and pessimistic scenarios.
To be able to understand the career path available to finance professionals
Knowing finance entails knowing as well the job opportunities available to finance
professionals.
Pair Research
You can imagine yourself being on top of
your career as a finance professional.
What are the possible careers in finance?
Careers in Finance
Commerce and Industry
² Financial Analyst – evaluating financial performance and preparing financial plans
(professional qualification exam / international certification – Chartered Financial Analyst (CFA)
² Cash management analyst – monitoring daily cash inflows and out flows
² Capital expenditures analyst – estimating cash flows and evaluating asset investment opportunities
² Credit analyst – evaluating credit applications
² Loan analyst – evaluating consumer and
commercial loan applications
² Bank teller – assisting customers with
their banking transactions
² Investment researcher – conducting
research on investment opportunities
Careers in Finance
Commerce
² Insurance agent – selling insurance policies to individuals and businesses and assisting them in
processing of claims
² Real estate agent – marketing, selling, and leasing residential or commercial properties
² Stockbrokers – assisting clients in purchasing stocks and bonds and building investment wealth
² Security analyst – analyzing and making recommendations on the investment potential of specific
² securities
Government
² Administrative Clerk – assisting in daily unit administration functions
² Examiner – performing compliance field work
Academe
² Lecturer– teaching basic finance subject
² Research assistant – assisting lead researchers in gathering data
Financial Environment
Areas of Financial Environment
1. Financial Institutions and Market – organizations or intermediaries that help the
financial system operate efficiently and transfer funds from depositors and investors to
individuals’ assets. These organizations provide financial services by dealing with the
management of money.
2. Investments – focuses on decisions made by businesses and individuals as they choose
securities for their investment portfolio. This involves the sale or marketing and analysis
of securities and the management risks.
3. Financial Management - the strategic planning, organizing, directing, and controlling of
financial undertakings in an organization or an institute. It also includes applying
management principles to the financial assets of an organization, while also playing an
important part in fiscal management
Financial Institutions
1. Banks
ü Supervised and regulated by the BSP
ü Universal and Commercial Banks
ü Thrift Banks
ü Savings Bank
ü Rural and Cooperative Banks
2. Insurance Companies
ü Supervised and regulated by the BSP
3. Lending Institutions
ü Make loan available for individuals and businesses
Internet Exercises
Visit the website of the following and answer the
questions below:
ü At least two universal and commercial
banks in the Philippines
ü At least two thrift banks in the Philippines;
ü At least two insurance companies
Questions:
1. What are their products and services?
2. How can individual make use of their
products and services as means to
finance a start-up business?
Financial Institutions
Terms:
² Financial Instruments – legal arrangements that require one party to pay money or something else
of value or to promise to pay under stipulated conditions to a counterparty in exchange for
the payment of interest, for the acquisition of rights, for premiums, or for indemnification
against risks.
It is any CONTRACT that
gives rise to a financial asset
of one entity and a financial
liability or equity instrument
of another entity.
Financial Market
Internet Exercises
HOW TO BORROW MONEY FROM A FINANCIAL INSTITUTION?
Many small businesses borrow money from financial
institutions as a way to cover start-up and initial
operating costs as a business gets off the ground.
Shop around for the best interest rate and compare loan
terms from one financial institution to another.
Questions:
1. Why borrow money from financial institutions?
2. What are the requirements?
3. What are the contents of the loan applications?
4. How long is the time for processing loans?
Financial Management
Financial management refers to the strategic planning, organizing,
directing, and controlling of financial undertakings in an organization
or an institute. It also includes applying management principles to
the financial assets of an organization, while also playing an
important part in fiscal management.
Objectives::
ü Maintaining enough supply of funds for the
organization;
ü Ensuring shareholders of the organization to
get good returns on their investment;
ü Optimum and efficient utilization of funds;
ü Creating real and safe investment opportunities
to invest in.
Financial Management
Financial management is also made up of certain elements.
These include:
Financial planning: This is the process of calculating the amount of capital t
hat is required by an organization and then determining its allocation. A fina
ncial plan includes certain key objectives, which are:
ü Determining the amount of capital required;
ü Determining the capital organization and structure;
ü Framing of the organization's financial policies and regulations.
Financial Management
Financial management is also made up of certain elements.
These include:
1. Financial planning: This is the process of calculating the amount of capit
al that is required by an organization and then determining its allocation. A f
inancial plan includes certain key objectives, which are:
ü Determining the amount of capital required;
ü Determining the capital organization and structure;
ü Framing of the organization's financial policies and regulations.
Financial Management
2. Financial control: This is one of the key activities in financial management. Its main
role is to assess whether an organization is meeting its objectives or not.
Financial control answers the following questions:
ü Are the organization's assets being used competently?
ü Are the organization's assets secure?
ü Is the management acting in the best financial interests of the organization and the
key stakeholders?
3. Financial decision-making: This involves investment and financing with regards to the
organization. This department takes decisions about how the organization should raise
finance, whether they should sell new shares, or how the profit should be distributed.
Financial Manager
A financial manager maintains the financial health of an organization and develops strategies and
plans for long-term financial goals, produces financial reports, and directs investment activities.
There are various types of financial managers such as insurance managers, cash managers, chief
financial officers (CFOs), treasure and finance officers, controllers, credit managers, and risk
Managers.
a bachelor’s degree in business administration,
01
finance, economics, or accounting
How to Become a 02 a candidate to have a master’s degree in
economics, administration, or finance.
Financial Manager? five or more years experience in another
03 financial or business occupation
04 With certification obtain one to demonstrate the
level of competence
My Finance Journal
HOW DO I MANAGE MY FINANCE TO ACHIEVE A GOAL?
Make a 2-week journal on how to manage
your finances in order to
achieve a goal of either acquiring/buying
something you like or saving a
certain amount of money for future use.
