(1) DIAGNOSTIC & INTRO TO BUSINESS FINANCIAL MANAGEMENT
Page 1 BUSINESS FINANCE SUBJECT TEACHER: WINALEEN M. CALAJATE
Page 2 BUSINESS FINANCE DIAGNOSTIC TEST
Page 3 Test 1: Multiple Choice Directions: Write the letter of your answer on a separate sheet of paper.
Which of the following is not a service provided by financial institutions?a. Buying the business of customer saving in stock and bondsb. Paying savers interest on deposited fundsc. Lending money to customers
How do most businesses sell securities in order to raise money?a. Direct placementb. Stock exchangec. Public offeringd. Private placement
The money market involves buying and selling of which?a. Funds that mature in more than one yearb. Flows of fundsc. Stocks and bondsd. Short-term funds
Page 4 Created by a financial relationship between suppliers and users of short-term funds?a. Financial marketb. Money marketc. Stock marketd. Capital market
Which is not a financial institution?a. Commercial bankb. Newspaper publisherc. Insurance company
Which requires funds from external sources?a. Financial marketsb. Private placementc. Financial institutionsd. All of the above
Primary goal of financial manager?a. Minimizing riskb. Maximizing profitc. Maximizing wealth
Page 5 Receives premium payments and uses for loans or investments?a. Life insurance companyb. Commercial bankc. Saving bankd. Credit bank
The goal of the firm enhances the wealth of?a. The Board of Directorsb. The federal governmentc. The firm's stockholders
Considerations for financial decisions?a. Only riskb. Only returnsc. Both risk and returnd. Risk, return, and the impact on share price
Page 6 Long-term debt instruments?a. Bondsb. Equitiesc. Stocksd. Bills
Retirement funds for employees?a. Life insurance companyb. Savings bankc. Pension fundsd. Credit bank
Type of financial intermediary that pools savings?a. Mutual fundb. Savings and loansc. Savings bankd. Credit union
Major securities traded in capital markets?a. Stocks and bondsb. Commercial paper and treasury billsc. Bonds and commercial paperd. Treasury bills and certificates of deposit
Page 7 Participants in financial transactions?a. Suppliers; usersb. Purchasers; sellersc. Users; providersd. Users; suppliers
Page 8 Test II: True or False A financial institution acts as a link between those who have money and borrowers needing it. Financial instruments aid finance managers in handling cash and operating requirements. Financial markets offer, buy, and sell financial instruments. Stocks are shares issued by the government.
Page 9 Commercial banks mainly accept deposits and extend credit. Investment banks help raise funds for small corporations and governments. A financial institution can be bank or non-bank. Business finance is available to borrowers for needs. Long-term debt example: bond. Money instruments are inexpensive for governments.
Page 10 KEY ANSWERS
Page 11 Test I: Multiple Choice A 6. False2. C7. BA8. True4. False
B9. A10. True
Page 12 QUESTIONS?
Page 13 Importance of Business FinanceUnderstanding significance in daily life.
Page 14 Managing Family FinanceImportance in everyday life.
Page 16 Activity 1List allocation of personal or family expenses (food, health, etc.).
Page 18 Activity 2Paste picture based on expense allocation list.
Page 19 General RuleFollow 50-30-20 allocation:50%: Needs30%: Wants20%: Savings
Page 20 Lesson ExpectationsIdentify corporate positions and roles.Understand activities of financial managers, markets, and instruments.Prepare diagram of financial system.
Page 21 Introduction to Financial Management
Page 22 ObjectivesUnderstand corporate roles and activities of financial managers.Identify financial markets, institutions, and instruments.Prepare financial system diagram.
Page 23 Activity 1.1AMatch roles and responsibilities of corporate positions.
Page 24 QuestionsChallenging role of financial management? Why?Desired future role? Reason?
Page 26 Definition of Business FinanceManaging monetary resources for financial objectives and company growth.
Page 28 What Is Accounting?Recording, classifying, and summarizing financial transactions.
Page 29 Financial vs. Managerial AccountingUsers, time focus, variability, precision, subject, rules, requirements.
Page 30 Role of Finance ManagersAcquire and manage funds to meet firm goals.
Page 31 Responsibilities of Finance ManagersManagement of working capital, valuation, financial control, wealth maximization.
Page 32 Organizational StructureRelationships from Board of Directors to financial staff.
Page 33 Controller vs. Treasurer RolesController: supervises accounting, ensures compliance.Treasurer: oversees finance, invests wisely.
Page 34 Positions in Corporate GovernanceShareholders elect Board of Directors.Board sets policies, strategies, budgets.
Page 36 VP for MarketingDirects sales and promotion, formulates strategies.
Page 37 VP for ProductionEnsures production meets demand, optimizes performance.
Page 38 VP for AdministrationOversees admin functions, enhances performance.
Page 39 Financial Management GoalsMaximize shareholder value, influence share market perception.
Page 41 Finance Manager DutiesAllocate funds, manage risk-return trade-off.
Page 42 Functions of Finance ManagerFinancingInvestingOperatingDividend policies
Page 43 Investment DecisionsHow and where to invest excess cash assets.
Page 45 Dividend PolicyDetermines if and when to declare cash dividends.
Page 46 Conditions for Dividend DeclarationSufficient retained earnings.Enough cash available.
Page 47 Primary Activities of a Financial ManagerPlanning, budgeting, forecasting, risk management.
Page 49 Classification TableFinancial Institution, Instrument, Market examples.
Page 50 Financial SystemInstitutions that enable fund exchange.
Page 52 Functions of Financial SystemAllocation of savings, facilitating transactions, managing risks.
Page 54 Financial InstrumentsContracts for monetary assets with defined obligations.
Page 56 What Is a Financial Institution?Entities offering financial and monetary services.
Page 59 Types of Financial MarketsOTC, debt, capital, forex markets.
Page 62 Cash Market vs. Delivery MarketReal-time trading vs. future payments.
Page 66 Financial Market ClassificationsPrimary vs. Secondary Markets, Money vs. Capital Markets.
Page 68 Financial InstitutionsPurpose Channel savings into loans or investments, influencing firm performance.
Page 70 Interrelationship Between RolesFinancial managers, markets, and investors.
Page 75 Business opportunities are like buses - always another one coming.
Page 76 THANK YOU.