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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