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INTRODUCTION TO FINANCIAL MANAGEMENT
plan - this is where the financial management starts finance - it is the science and art of managing money (gitman & zutter, 2012) budgetting - is the act of estimating revenue (in the form of allowance) and expenses over a period of time how much they: spend, save and need, invest, raise - finance is concerned with decision about ... sole proprietorship - a business owned by one person and operated for his or her own profit partnership - a business owned by two or more people and operated for profit corporation - an entity created by law owned by shareholders
privately owned corporation - corporations which are often owned by family members whose stocks may not be offered to outsiders unless consent by the family members is secured publicly owned corporation - corporations which are owned by unrelated investors and are traded in organized exchanges like the Philippine Stocks Exchange. while there are many stockholders, there is generally a group of investors or a family that controls each listed company. large quantity of cash - it signals unhealthy company practices. it may tell them that the management has not been putting the company's resources into good use keeping to much cash in the books - this is like hiding your extra allowance under their bed. they will be missing out on investment opportunities wealth maximization - this is the overall objective of a shareholder
market price - same with the other factors affecting share price, dividend policies should go hand in hand with other factors determining the ... external factors - this factors influence the general reaction of investors in making an investment decision external factors - its effects is not only to a specific comlany but on all companies or a group of companies under similar circumstances external factors - such factors are the result of the environment a company operates in rather than the decisions of the company's management financial management - this deals with the decisions which are supposed to maximize the value of shareholders' wealth (cayanan) markets perception, share price - the decisions made in the financial management will ultimately affect the ... of the company and influence the ...
maximaze the value of shareholdsrs' stocks - this is the goal of financial management managers - they are the ones responsible for making the decisions for the company that would lead towards share holders' wealth maximization shareholders - they are the ones who elect the board of directors (BOD) carry out the shareholders' objectives - this is the responsibility of the boards of directors board of directors - it is the highest policy making body in a corporation. its responsibility is to ensure that the corporation is operating to serve the best interest of stockholders president (chief executive officer) - the a responsible of everseeing the company, the one performing all areas of management and is the one who represents the company in professional, social and civic activities
capital structure - it refers to how much of your total assets is financed by debt and how much is financed by equity short term investment decisions - this kind of investment decisions are needed when the company is in an excess cash position financial planning tools (budgeting, forecasting) - to be able to plan for short term investment decisions, the financial manager should be able to make use of ... capital budgeting analysis - long term investment should be supported by a ... which is among the responsibilities of a finance manager capital budgeting analysis - is a tool to assess whether the investment will be profitable in the long run operating decisions - these decisions deal with the daily operations of the company
accounts receivable and inventories - the role of the VP for finance is determining how to finance working capital accounts such as ... short term sources - are those sources which will be payable in at most 12 months profitability and liquidity risk - short term sources pose a trade-off between ... and ... because these sources mature in a short period, hence, there's a possibility that the company may not be able to obtain enough cash to pay its obligation higher interest rate - what makes a long term source higher the short term source non-declaration of dividends - the case when the shareholder do not get his/her dividend, hence it is the role of financial manager to determine when the company should declare cash dividends enough retained earnings (accumulated profits) and cash - before a company may be able to declare cash dividends, two conditions must exist: ...
debt securities - financial instrument that provides a contractual right to receive cash treasury bonds and treasury bills - these bonds and bills usually have low interest rates and have very low risk of default since the government assures that these will be paid corporate bonds - these bonds are issued by publicly listed companies. they usually have higher interest rates and risks preferred stock - it has a priority over a common stock in terms of claims over the assets of a company holders of common stock - they are the real owners of the company financial markets - organized forums in which the suppliers and users of various types of funds can make transaction directly primary market - to raise money, users of funds will go to ... to issue new securities (debt/equity) through a public offering or private placement
public offering - the sale of new securities to the general public initial public offering - the first offering of stock private placement - the sale of new securities to one investor or group of investors secondary market - this is where the sale of pre-owned securities happens philippine stock sxchange (PSE) - is both a primary and secondary market commercial banks, insurance companies, mutual funds, pension funds - examples of financial institution commercial banks - these use the deposited funds to provide commercial loans to firms and personal loans to individuals, and purchase debt securities issued by firms of government agencies
