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FINACE-AND-MONEY (1)

The document provides an overview of finance, covering its definition, types (personal, corporate, and public finance), and the essential concepts of money management. It explains key financial processes such as investing, borrowing, lending, budgeting, saving, and forecasting, emphasizing their importance for individuals, businesses, and governments. Additionally, it discusses financial instruments like loans, shares, and debentures, highlighting their roles in capital management and investment.

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Stephanie Shane Arellano
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8 views

FINACE-AND-MONEY (1)

The document provides an overview of finance, covering its definition, types (personal, corporate, and public finance), and the essential concepts of money management. It explains key financial processes such as investing, borrowing, lending, budgeting, saving, and forecasting, emphasizing their importance for individuals, businesses, and governments. Additionally, it discusses financial instruments like loans, shares, and debentures, highlighting their roles in capital management and investment.

Uploaded by

Stephanie Shane Arellano
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Slide 1: Title Slide

 Title: Finance and Money: Understanding the Essentials

 Subtitle: A Guide to Financial Concepts and Money Management

 Visuals: A collage of financial symbols like currency, stock charts, and


coins.

Slide 2: What is Finance?

 Text:

o Finance is the study of money management, including the


processes of investing, borrowing, lending, budgeting, saving,
and forecasting.

o It involves understanding how individuals, businesses, and


governments raise and allocate resources over time.

 Visuals: A balanced scale with "Investments" on one side and


"Savings" on the other, representing the core balance in finance.

Slide 3: Types of Finance

 Text:

1. Personal Finance: Managing individual income, spending, and


investments.

2. Corporate Finance: Managing a company's finances to


maximize shareholder value.

3. Public Finance: Managing government expenditures, revenues,


and debt.

 Visuals: Icons representing personal finance (piggy bank), corporate


finance (company building), and public finance (government building).

Slide 4: Understanding Money

 Text:
o Money is a medium of exchange that facilitates trade and serves
as a unit of account, a store of value, and a standard of deferred
payment.

o Modern money includes physical forms (coins and paper


currency) and digital forms (bank deposits, cryptocurrency).

 Visuals: Evolution of money from bartering, to coins, to digital


currency (e.g., Bitcoin).

SLIDE 2

Explanation

The study of money management, which encompasses investing, borrowing,


lending, budgeting, saving, and forecasting, is a fundamental aspect of
finance. These processes collectively guide individuals, businesses, and
governments in making informed financial decisions.

 Investing: Allocating resources, usually money, to generate returns


over time, often in stocks, bonds, real estate, or other ventures.

 Borrowing: Obtaining funds with the intention of paying them back,


typically with interest. It allows individuals or businesses to make large
purchases or investments without paying the full amount upfront.

 Lending: The opposite of borrowing, where one party provides funds


to another under the agreement that it will be repaid, usually with
interest.

 Budgeting: Planning and tracking income and expenditures to ensure


that spending does not exceed earnings and to allocate resources
efficiently.

 Saving: Setting aside money for future needs or emergencies,


typically in a low-risk, easily accessible form, such as a savings
account.

 Forecasting: Predicting future financial conditions based on current


data and trends, which helps in planning for expenses, investments,
and potential financial risks.

SLIDE 3

In essence, managing income, spending, and investments is about


creating a balance between living well today and ensuring financial
security for tomorrow. It involves making informed decisions, setting
priorities, and consistently reviewing and adjusting strategies to meet
personal financial objectives.

SLIDE 4

Managing a company’s finances to maximize shareholder value means


focusing on strategies that grow the company’s profitability, reduce risks,
and optimize the use of resources, all with the goal of increasing the
company's stock price and providing financial returns to shareholders.

SLIDE 5

Public Finance is essential for the operation and sustainability of a


government. It ensures that resources are collected and spent wisely to
provide essential services, manage economic cycles, and promote social
welfare and economic growth.

SLIDE 14

1. Retained profit (or retained earnings) refers to the portion of a


company's net income that is not distributed to shareholders as
dividends but is instead kept within the company for
reinvestment or to pay off debts.
2. Personal savings refers to the portion of an individual's income
that is set aside and not spent on current consumption. Instead,
this money is saved for future use or investment. Personal
savings play a critical role in financial security and wealth-
building.
3. The sale of unwanted assets typically involves disposing of items
that no longer serve a useful purpose to the owner. These assets
can range from physical property like machinery, real estate, or
inventory, to financial assets such as shares or bonds. The
primary goal is to convert these non-essential or non-performing
assets into cash or more liquid resources that can be redirected
to more productive uses.
4. Sale and Leaseback (also called a sale-leaseback) is a
financial transaction where an entity sells an asset (often real
estate, equipment, or property) and then immediately leases it
back from the buyer. This allows the seller to continue using the
asset without ownership while unlocking the capital tied to it.
SLIDE 15
1. A loan is a financial agreement where a lender provides money to a borrower, with the
understanding that the borrower will repay the loan over time, usually with interest.
Loans are fundamental to both personal and business finance, enabling people and
companies to access funds for various purposes, such as buying a home, starting a
business, or covering unexpected expenses.

Key Components of a Loan:

1. Principal:
o The principal is the original sum of money borrowed from the lender. For
example, if you take out a loan of $10,000, that amount is your principal.
2. Interest:
o Interest is the cost of borrowing money, typically expressed as an annual
percentage rate (APR). It represents the lender's compensation for providing the
loan.
o Interest can be fixed (remains constant over the life of the loan) or variable
(changes based on prevailing interest rates).
3. Term:
o The term of a loan refers to the time period over which the loan must be repaid.
Common loan terms range from a few months to 30 years or more.
o Short-term loans typically have higher interest rates but are paid off quickly.
Long-term loans often have lower monthly payments but cost more in interest
over time.
4. Repayment Schedule:
o Loans are repaid over time in regular installments, often monthly. Payments
typically include both principal and interest. In the early stages of a loan, a larger
portion of the payment usually goes toward interest.
5. Collateral:
o Some loans are secured by collateral (e.g., a house or car). If the borrower
defaults, the lender can seize the collateral to recover the debt.
o Unsecured loans (e.g., personal loans, credit cards) do not require collateral but
often come with higher interest rates due to the increased risk for the lender.

2. Overdraft finance refers to a facility provided by banks allowing


individuals or businesses to withdraw more money from their accounts
than what is currently available. It essentially acts as a short-term
credit line, helping cover unexpected expenses or temporary cash
shortfalls. Overdrafts are commonly used in both personal and
business banking to manage liquidity and working capital needs.
Example of Overdraft Finance:
Imagine a business with $2,000 in its account but needs to make an urgent payment of
$3,000. If the business has an authorized overdraft facility with a limit of $5,000, they
can overdraw $1,000 to make the payment. The bank will charge interest on the
overdrawn amount ($1,000) until it’s repaid. If the business repays the $1,000 within a
few days, it only incurs a small amount of interest.

3. Shares (also known as stocks or equities) represent ownership in a


company. When you buy shares, you acquire a portion of that company
and thus become a shareholder. Shares are a fundamental component
of the equity market and offer a way to invest in a company’s potential
for growth and profitability.

Imagine you buy 100 shares of Company X at $50 per share. Your
initial investment is $5,000. If the share price increases to $70, your
shares are now worth $7,000. If Company X declares a dividend of $2
per share, you would receive $200 in dividends. Conversely, if the
share price falls to $30, your shares are worth $3,000, resulting in a
loss if you were to sell at that price.
4. Debentures are a type of debt instrument used by companies and
governments to raise capital. They are similar to bonds but usually
unsecured, meaning they aren't backed by any collateral. Instead, they
are supported only by the issuer's creditworthiness and reputation.

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