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Finance
Financial management is part of a larger discipline called
Finance
is a body of facts, principles, and theories relating to and using money by individuals idividuals, business, and governments.
Investing decision
These are the decisions which determine how scarce or limited resources in terms of
funds of the business firms are committed to projects.
Financing decision
These are the decisions that assert the mix of debt and equity chosen to finance
investments should maximize the value of investments made.
finance
concerned with the
monetary aspects of the
business
Corporate governance
It is the process of monitoring managers and aligning their incentives with shareholder’s goals.
Ethical behavior
The fiduciary relationships between the Finance Professional and client oftentimes create tempting
opportunities for the finance personnel to make decisions that may benefit themselves or of people
they know.
Corporation
An artificial being
created by law
formed by
incorporators and
owned by
shareholders
financial statement analysis
It is the process of extracting information from
financial statements to better understand a company’s
current and future performance and financial
condition.
Life cycle
Is it strong and mature,
reaping the benefits of
competitive advantage?
outputs
Are its products new,
established or dated?
inputs
Who are its suppliers?
competition
In what kind of market
does it operate?
financing
Is it going public?
Governance
Does management have a
large portion of its wealth
tied to the company’s
stocks?
3
Types of Financial Decisions
4
short term goals
4
managers (corporate governance)
3
Financial Manager
Makes Decisions
Involving
4
Important Business Trends
4
Reporting Business Activities
9
Analyzing the Broader Business Environment
5
The Financial Statements
4
Constraints on Relevant & Reliable Information
7
Demand for Financial Accounting Information
Note 
Flashcard (71)