Introduction to Financial Management
Both a 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 utlilization of financial resources, investments and expenditures.
Concept of Finance
A field of specialization that deals with and is strictly governed by financial facts and truths which in turn are based on accepted industry and professional standards.
Finance
Do not remain static but become adaptive to the changes in the business environment.
Financial Practices
Deals with the capital structure of a corporation, including its funding and the actions its management takes to increase the value of the company
Business Finance / Corporate Finance
Deals with the decisions that are supposed to maximize the value of the shareholder’s wealth and maximize the value of shares of stock.
Financial Management
Very important especially in the financial aspect of the business.
Organizational Structure
Elect the Board of Directors (BOD). Each share held is equal to one voting right. Since they elect the BOD, their responsibility is to carry out the objectives of the shareholders. Otherwise, they would not be elected in that position.
Shareholders
The highest policy making body in a corporation. Their primary responsibility is to ensure that the corporation is operating to serve the best interest of the stockholders.
Board of Directors
a. Approving the information and other disclosures reported in the financial statements. Overseeing the operations of a company and ensuring that the strategies as approved by the board are implemented as planned.
b. Performing all areas of management: planning, organizing, staffing, directing and controlling.
c. Representing the company in professional, social, and civic activities.
President (Chief Executive Officer)
a. Formulating marketing strategies and plans. Directing and coordinating company sales.
b. Performing market and competitor analysis.
c. Analyzing and evaluating the effectiveness and cost of marketing methods applied.
d. Conducting or directing research that will allow the company identify new marketing opportunities, e.g. variants of the existing products/services
already offered in the market.
e. Promoting good relationships with customers and distributors.
VP for Marketing
a. Ensuring production meets customer demands.
b. Identifying production technology/process that minimizes production cost and make the company cost competitive.
c. Coming up with a production plan that maximizes the utilization of the company’s production facilities.
d. Identifying adequate and cheap raw material suppliers.
VP for Production
a. Coordinating the functions of administration, finance, and marketing departments.
b. Assisting other departments in hiring employees.
c. Providing assistance in payroll preparation, payment of vendors, and collection of receivables.
d. Determining the location and the maximum amount of office space needed by the company. Identifying means, processes, or systems that will minimize the operating costs of the company.
VP for Administration
Determine the appropriate capital structure or day to day operations of the company; Forecasting the requirements of funds through the of techniques of Budgetary control or managing income and expenditures and long range planning.
VP for Finance/ Financial Manager
Combination of debt (loan) and equity (own funds) used by a company to finance its overall operations and growth.
Capital Structure
Fund procured from different sources have to be invested in various kinds of assests
Investment decision
Share of profits and retained earnings
Dividend