Business Finance Week 1 PDF

BUSINESS FINANCE  DEFINITION OF IMPORTANT TERMINOLOGIES BUSINESS It is a lawfull activity concerned with production and/or distribution of goods and services for profit FINANCE: Is the study of how individuals or businesses evaluate...

BUSINESS FINANCE  DEFINITION OF IMPORTANT TERMINOLOGIES BUSINESS It is a lawfull activity concerned with production and/or distribution of goods and services for profit FINANCE: Is the study of how individuals or businesses evaluate investment opportunities, business proposals, and business projects, and raise capital to fund them. Is the study of how individuals, institutions, governments and businesses acquire, spend and manage money and other financial assets. Financial Management: Involves financial planning, asset management and fund raising decisions to enhance the value of businesses. Means the efficient and effective management of funds. Financial Environment: includes the financial system, institutions, markets and individuals that make the economy. Financial Institutions: Are organizations or intermediaries like banks, insurance companies and investment companies. Engaged in financial activities to aid the flow of funds from savers, to borrowers or investors. Financial Markets: Are physical or electronic forums that facilitate the flow of funds among investors, businesses, and governments. Business Finance: Involves the management of financial resources available to the organization. Studies the role of financial manager. Financial Markets: Are physical or electronic forums that facilitate the flow of funds among investors, businesses, and governments. Business Finance: Involves the management of financial resources available to the organization. Studies the role of financial manager.  The Study of Business Finance covers three major spheres: 1. The allocation of an adequate supply of capital for business needs, both short-term and long- term. 2. The procurement of funds at the most favorable terms at least cost to the business. 3. The efficient management of capital for profit- maximization and increasing the value of the firm. 3 Elements to consider to be successful in business finance function, Ernest Jones (1994): -First, the business entity must obtain money from the right sources and invest it in the right places; -Second, it must continue to attain its purpose of gaining profit; -Third, cash must be available when it is needed, and its availability can be crucial in some decision- making situations. Financial Manager's Responsibilities: Forecasting and Planning Making Crucial Investment and Financing Decision Coordinating and Controlling Trading in Financial Markets Risk Management