Lesson 1 - Managerial Finance PDF

FIN 1A MANAGERIAL FINANCE INTRODUCTION TO MANAGERIAL FINANCE LEARNING GOALS LG 1  LG 2 Define finance, Describe the goal of the managerial finance firm, and explain why function, and maximizing the value of...

FIN 1A MANAGERIAL FINANCE INTRODUCTION TO MANAGERIAL FINANCE LEARNING GOALS LG 1  LG 2 Define finance, Describe the goal of the managerial finance firm, and explain why function, and maximizing the value of the firm is an appropriate financial the goal for a business. management. WHAT IS THE GOAL OF FINANCIAL  MANAGEMENT? WHAT IS FINANCE? Finance can be defined as the science and art of managing money.  CAREER OPPORTUNITIES IN FINANCE FINANCIAL SERVICES MANAGERIAL FINANCE The area of finance individuals, businesses, and concerned with the design governments. and delivery of advice and Concerns the duties of the financial products to financial manager in a business. FINANCIAL MANAGER Actively manages the financial affairs of all types of businesses, whether private or public, large or small, profit seeking or not for profit. SOLE PROPRIETORSHIP A business owned by one person and operated for his or her own profit. LEGAL FORMS OF BUSINESS ORGANIZATION PARTNERSHIP CORPORATION An entity created by law.  A business owned by two or more people and operated for profit. Sole Proprietorship Strengths Weaknesses Owner has unlimited liability - total Owner receives all profits Low wealth can be taken to satisfy debts Limited fund-raising power tends to organizational costs Independence inhibit growth. Secrecy Proprietor must be jack-of-all-trades Ease of dissolution Difficult to give employees long-run career opportunities Lacks continuity when proprietor dies Partnership Strengths Weaknesses Owners have unlimited liability Can raise more funds than sole and may have to cover debts of proprietorships other partners Borrowing power enhanced by Partnership is dissolved when a more owners partner dies More available brain power and Difficult to liquidate or transfer managerial skill partnership Corporation  Strengths Weaknesses Owners have limited liability, which Has better access to financing guarantees that they cannot lose more Taxes generally higher than they invested More expensive to organize than Can achieve large size via sale of other business forms ownership (stock) Subject to greater government Ownership (stock) is readily regulation Lacks secrecy because regulations transferable Long life of firm require firms to disclose financial Can hire professional managers results HOW CAN INVESTMENTS BE  STRUCTURED TO MAXIMIZE POSITIVE SOCIAL IMPACT? FINANCIAL MANAGEMENT as a discipline seeks to optimize the financial resources (of) and returns (to) the entity, by optimizing two primary activities, namely – Financing activities Investing activities  by deciding which investments by deciding which sources of should be undertaken by the funding (debt or equity) should be entity within the limitations of used by the entity and what the available funds and the optimal proportion is for the identified feasible (can it be various sources used; and done?) and viable (does it derive a positive return?) investment projects. WHY IS FINANCIAL MANAGEMENT BEING ESSENTIAL FOR A HEALTHY ECONOMY? WHAT IS THE GOAL OF AN ENTITY? MAXIMIZE SHAREHOLDER WEALTH AS AN IGNACIAN MARIAN STUDENT, WHY IS IT IMPORTANT TO HAVE AN IDEA OF HOW MUCH  YOU RECEIVE AND SPEND EACH MONTH? “You shall remember the Lord your God, for it is he who gives you power to get wealth, that he may confirm his covenant that he swore to your fathers, as it is this day.” - Deuteronomy 8:18 THANK YOU FOR LISTENING!  Any questions? Clarifications? Kenneth Chandria Parangan [email protected] 0997-8691867