Introduction to Business Finance PDF

Introduction to Business Finance Learning Objectives At the end of our lesson, you are expected to: Discuss the nature of finanace, Financial Management and the different individuals involved. Explain the function of the Financial Manager.  Finance...

Introduction to Business Finance Learning Objectives At the end of our lesson, you are expected to: Discuss the nature of finanace, Financial Management and the different individuals involved. Explain the function of the Financial Manager.  Finance Difined as the management of money and includes activities such as investing, borrowing, lending, budgeting, saving, and forecasting. (Corporate Finance Institute) FINANCE FINANCE Basic Areas of Finance Corporate Finance (Business Finance) Investments Financial Institutions International Finance  INVESTMENTS Work with Value of financial financial assets assets, risk versus such as stocks and return, and asset bonds allocation International Finance Need to be familiar with; Exchange rates Political risk Customs of other countries Speaking a foreign language Corporate Finance or Business Finance Deals with the capital structure of a corporation, including it’s funding and the actions that management takes to increase the value of the company. Corporate Finance or Business Finance 1. What long-term investments should the firm undertake? (Capital Budgeting decisions) Corporate Finance or Business Finance 2. How should the firm fund these investments? (Capital Structure decisions) Corporate Finance or Business Finance 3. How can the firm best manage its cash flows as they arise its day-to-day operations? (Working Capital Management Decisions) Financial Management means planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of the enterprise Functions of Financial Manager 1. Estimating the requirements of funds -A careful estimate of funds like working capital (day to day operation) is required to be made. Functions of Financial Manager 1. Estimating the requirements of funds -Forecasting the requirements of funds through the use of techniques of BUDGETARY CONTROL, (managing income and expenditure) and long range planning. Functions of Financial Manager 2. Decision regarding Capital Structure - Capital Structure - combination of debt (loan) and equity (own funds) used by a company to finance its overall operations and growth. Functions of Financial Manager 3. Investment decisions - Funds procured from different sources have to be invested in various kinds of assets. Functions of Financial Manager 4. Divedend decision - The Finance Manager is concerned with the decision to pay or declare dividend (a share of profits and retained earnings). Functions of Financial Manager 4. Divedend decision - He/She is to assist the top Management in deciding as to what amount of dividend should be paid to the shareholders and what amount be retained by the company. Functions of Financial Manager 5. Supply of funds to all parts of the organization or Cash Management. - ensure that all sections i.e branches, factories, units or departments of the organization are supplied with adequate funds or an adequate supply of cash at all points of time. Functions of Financial Manager 6. Evaluating Finacial performance - constantly review the financial performance of various units of the organization. -analysis of financial performance hepls the management for assessing how the funds are utilized in various divisions and what can be done to improve it. Functions of Financial Manager 7. Financial negotiations - carrying out negotiations with financial institutions, banks and public ddepositors. Thank You