FINANCIAL

MANAGEMENT (Basic Finance)

Mr. Niño S. Ronquillo, MBA, CSSWB, Dhumhc, FOGL,
DBSIhc
  MAKE A PROFIT
 MAXIMIZE PROFIT
 CREATE A CUSTOMER
PURPOSE OF BUSINESS  BUILD A LONG TERM
RELATIONSHIP
 SOCIAL RESPONSIBILITY

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 Create a new market or
benchmark
 Plan your business
finances
 Pick the right people
 Choose the best name
for your small business
Rules for starting a business in Philippines
 Apply for licenses and
permits
 Take advantage of social
media and free website
builders
 Be resilient
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 The process of
achieving goals and
objectives efficiently
and effectively through
with people.
 Is the art of getting
work done through
others.
 Someone who
coordinates and
oversees the work of
other people so that Manager
organizational goals can
be accomplished.

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 FUNCTIONS OF MANAGEMENT

PLANNING DIRECTING

STAFFING

ORGANIZING CONTROLLING 7
Meaning and Definition of Finance
Meaning of Finance
Finance-Art and science of managing money. It includes financial
service and financial instruments. Finance also is referred as the provision of
money at the time when it is needed. Finance function is the procurement of
funds and their effective utilization in business concerns.
Goals of Finance

● Maximize the profit or revenues

● Minimize the expenses
● Allocate resources
Types of Finance
1. Public Finance-concerns with revenue and disbursement of Government such as Central
Government, State Government and Semi-Government Financial matters.
2. Private Finance-which includes the Individual, Firms, Business or Corporate Financial activities
to meet the requirements.
Personal Finance

● Is the science of handling money. It involves all financial decisions and

activities of an individual or household – the practices of earning, saving,
investing and spending.
● mainly concerned with the
effective funds
management in the
business.

● Is an integral part of
overall management. It is
concerned with the duties
of the financial managers
in the business firm.
Financial Manager

● Is a person who takes care of the important financial functions of an

organization
Approaches to Financial Management

1. Traditional approach
2. Modern approach
Function of Finance Manager
1. Forecasting financial requirements-Responsible to estimate the financial requirement of the
business concern. He should estimate, how much finances required to acquire fixed assets and forecast
the amount needed to meet the working capital requirements in future.

2. Acquiring necessary capital-finance manager should concentrate how the finance is mobilized and
where it will be available.

3. Investment Decision-The finance manager must carefully select best investment alternatives and
consider the reasonable and stable return from the investment.

4. Cash management- is essential for effective utilization of cash but it also helps to meet the short-
term liquidity position of the concern.

5. Interrelation with Other Departments-Finance manager deals with various functional departments.
Importance of Financial Management
● Financial Planning-Financial management helps to determine the financial requirement of the
business concern and leads to take financial planning of the concern. Financial planning, helps to
promotion of an enterprise.
● Acquisition of funds-Involves possible sources of finance at minimum cost.
● Proper use of funds-Can improve operational efficiency and reduce the cost of capital and
increase the value of the firm.
● Financial decision-Promotes making a sound financial decisions which will affect all the concerns
of the entire business operations because of its direct relationship to all business functions.
● Improve profitability-with the help of strong financial control devices such as budgetary control,
ratio analysis and cost volume profit analysis.
● Increase the value of the firm-with the help of strong financial control devices such as budgetary
control, ratio analysis and cost volume profit analysis.
● Promote savings-Savings are possible only when the business concern earns higher profitability
and maximizing wealth. Effective financial management helps to promoting and mobilizing
individual and corporate savings.
Principles of Financial Management Systems

 Consistency
 Accountability
 Transparency
 Integrity
 Financial stewardship
 Accounting standards
 TYPES OF BUSINESS

Sole Proprietorship
Corporation

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Partnership
SOLE is an unincorporated business with only one
owner who pays personal income tax on
PROPRIETORSHIP profits earned.

DISADVANTAGE
ADVANTAGE
 Risk and liability is shouldered by the
 Easier to set up and register
owner alone
 Requires minimal amount of capital
 The loss is solely suffered by the owner
 Lower cost in registering for government
 You manage and operate the business on
permits and licenses
your own which sometimes leads to
 Minimal regulations and monitoring
exhaustion
requirements
 Shareholders, such as creditors or
 You can register and run your business on
government agencies, can run after your
you own
own personal assets since the business is
 You can enjoy the profits on your own
you.

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 Is a organization composed of 2 or more
owners operate a business,; they share their
PARTNERSHIP profits proportion to their percent
partnership interest.

LIMITED PARTNERSHIP
GENERAL PARTNERSHIP
Passive investors
All members share both profits and liabilities regardless of
their partnership percentage.
Are a common structure for professionals, such as
Each partner have unlimited liability.
accountants, lawyers, and architects. This arrangement limits
partners' personal liability

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 Is a organization composed of 2 or more
owners operate a business,; they share their
PARTNERSHIP profits proportion to their percent
partnership interest.

ADVANTAGE DISADVATAGE

 Less formal with fewer obligations  The business has no independent legal status
 Easy to get started  Unlimited liability
 Sharing the burden  Perceived lack of prestige
 Access to knowledge, skills, experience and contacts  Limited access to capital
 Better decision making  Potential for differences and conflict
 Privacy  Slower, more difficult decision making
 Ownership and control can combined  Profits must be shared
 More partners, more capital  Personally demanding
 Prospective Partners  Taxation
 Easy access to profit  Partners are held liable for each other’s action

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 A form of business operation that declares the business as
a separate, legal entity guided by a group of officers
known as the board of directors
CORPORATION An important element of a corporation is limited
liability, which means that shareholders may take part
in the profits through dividends and stock appreciation
but are not personally liable for the company's debts

ADVANTAGE DISADVANTAGE

 Limited liability  Time

 Ability to raise money by selling shares  Complex Paperwork
 Separate corporate tax treatment  Costs to form a corporation
 Advantages when recruiting employees  Profits of corporation are double taxed

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ENTREPRENEURSHIP

It is a proactive process of developing a business

venture to make a profit.
The capacity and willingness to develop, organize
and manage a business venture along with any of its risks in
order to make a profit.
SOCIAL AND ECONOMIC BENEFITS OF
ENTREPRENEURSHIP

1. It produces more jobs that equate to an increase in national income.

2. It amplifies economic activities of different sectors of society.
3. It introduces new and innovative products and services.
4. It improves people’s living standards.
5. It disperses the economic power and creates equality.
6. It controls the local wealth and balances regional development
7. It reduces social conflicts and political unrest.
8. It elicits economic independence and capital formation.
 TYPES OF ENTREPRENEURS ACCORDING TO
THEIR FIELD OR EXPERTISE
• TECHNOPRENEUR – puts technology at the core of his or her
business model
• SOCIAL ENTREPRENEUR – helps the community rather than
making a profit
• INTRAPRENEUR – an entrepreneur in a large company who is tasked
to think, establish, and run a new big idea or project.
• EXTRAPRENEUR – hops from one company to another to act as
innovation champion, providing creative and efficient solutions.