G1 Flashcards
(23 cards)
Defined as the art and science of managing money.
Finance
It is concerned with the process, institutions, markets and instruments involved in the transfer of money among individuals, business and governments.
Finance
Is indeed, the key to success in business operations. It is concerned with the acquisition, financing and management of assets with some overall goals in mind.
Financial Management
Refers to the allocation of financial resources, time, or other assets to pursue economic activities that have the potential to generate profits or fulfill long term objectives.
Investing
FM CAN BE DIVIDED INTO THREE MAJOR DECISIONS:
- Investing
- Financing
- Dividend decision
Involves the commitment of funds to acquire or develop assets, expand operations, conduct research and development, or invest in human capital.
Investing
- Is the process of providing funds for business activities, making purchases, or investing.
Financing
is a part o f profits that are available for distribution, to equity shareholders.
Dividend Decision - Dividend
This means that the finance manager has to make decisions in a manner that the profit is maximized. A process by which a firm determines the price, input and output levels that will lead to the highest possible profit.
- Traditional Approach – PROFIT MAXIMIZATION
A process by which a firm determines the price, input and output levels that will lead to the highest possible profit.
Traditional Approach – PROFIT MAXIMIZATION
*Also known as Net Present Worth Maximization. *Means maximizing the shareholder’s wealth due to an increase in share price, thereby increasing the company’s market capitalization.
*Modern Approach – WEALTH MAXIMIZATION
*Are groups such as employees, customers, suppliers, creditors, owners and others who have a direct economic link to the firm.
*A party that has an interest in a company and can either affect or be affected by the business.
STAKEHOLDERS
*A party that has an interest in a company and can either affect or be affected by the business.
STAKEHOLDERS
is standards of conduct or moral judgment.
Ethics
is almost the same as most enterprises.
Occupies such a major place that it cannot be the sore responsibility of the executives.
financial function
- Is basically to assist the top management. He has an important role to contribute to good decision-making on issues that involve all the functional areas of the business.
CHIEF FINANCIAL OFFICER (CFO)
He must clearly bring out the financial implications of all decisions and make them understood.
CHIEF FINANCIAL OFFICER (CFO)
is commonly responsible for handling financial activities, such as financial planning and fundraising, making capital expenditures.
Treasury Function -
typically handles the accounting activities such as corporate accounting, tax management, financial accounting and cost accounting.
Control Function
Is a business owned by one person who runs for his own profit.
SOLE PROPRIETORSHIP –
Is a business run by two or more persons for profit. Most partnerships are established by a written contract known as “Deed of Partnership”.
PARTNERSHIP –
Is a legal entity, separated from the owners, with perpetual succession.
CORPORATION –
Is responsible for managing day-to-day operations and carrying out the policies established by the Board.
PRESIDENT OR CHIEF EXECUTIVE OFFICER (CEO) -
