Financial Management and Financial System Review

This set of flashcards covers the definitions, functions, and components of financial management and the financial system based on the lecture transcript.

Main Goal of Financial Management

To maximize the value of the business while ensuring that funds are used wisely, risks are managed, and financial goals are achieved.

Financial Forecasting

A function of financial management that predicts future income, expenses, and cash needs using past data and current trends.

Budgeting

The process of creating a financial plan for expected income and expenses to control spending, avoid waste, and guide resource use.

Risk Management

The function performed when a business engages in activities like buying insurance for business assets.

Resource Acquisition

The function of financial management involved when applying for a bank loan to expand a business.

Financial System

The network of people, institutions, markets, instruments, and rules that help move money from savers to borrowers and support economic activity.

Financial Instruments

Written or electronic claims to money or ownership, such as cash, checks, stocks, bonds, and loans.

Financial Markets

Places where financial instruments are bought and sold, including the stock market, bond market, and money market.

Financial Institutions

Organizations that provide financial services, such as banks, cooperatives, and insurance companies.

Regulating Bodies

Government agencies that supervise and protect the financial system, such as the BSP and SEC.

BSP

Bangko Sentral ng Pilipinas; a regulating body in the Philippines that supervises the financial system.

SEC

Securities and Exchange Commission; a government agency in the Philippines that acts as a regulating body.

Philippine Stock Exchange

A specific example of a Financial Market where instruments are traded.

Financial Management

The process of planning, organizing, directing, and controlling the financial activities of a business, focusing on how money is acquired, used, monitored, and protected.