Financial Management

• Finance:

  • Both science and art 
  • Application of economic and accounting concept 
  • Based on facts and truth 
  • New developments and trends 
• Management: efficient handling of business resources 

  Allocation: wise distribution of financial resources to different functional areas
• Financial Resources: refer to the funds of a business that areprovided by the owner or by the creditors.
• Financial Investments: resources that are expected to provide income and achieve appreciation or growth of the business.
• Financial Expenditures- of a business may cover the operatingexpenditures and capital expenditures.
• Areas of Finance:

  • Private
  • Public
  • Personal
  • Business
• • Private: private individuals, non-governmental orgs, and private orgs; different policies 
• • Personal: management of personal resources of an individual  
  • Rely on other income sources (Compensation, Profession, Business income) 
  • Allocation based on individual's personal need 
• Business: focus on the handling and management of financial resources of a business organization
• • Public: allocation of government income generated from tax or borrowings 
  • DOF Agencies
• 3 Major Divisions of Business Finance 

  • Financial Management
  • Capital Market
  • Financial Investment
• Financial Management: capital budgeting decision 
• Capital Market: study financial institutions and their functions that provides financial assistance
• Financial Investment: business decisions about the value and price of stock, bonds, etc.
• 4 Functional Divisions Involved: 

  • Marketing 
  • Production and Operation Division 
  • General Administrative or Human Resources 
  • Finance Division