Q1 LAS Business Finance 12 Week 1 Comp1.pdf

LEARNING ACTIVITY SHEET Grade Level/ Grade 12 – Business Finance Quarter 1 Subject Week 1 Topic INTRODUCTION...

LEARNING ACTIVITY SHEET Grade Level/ Grade 12 – Business Finance Quarter 1 Subject Week 1 Topic INTRODUCTION TO FINANCIAL MANAGEMENT Competency 1 MELC Explain the major role of financial management and the Duration 2 hours different individuals involved Specific Define Finance Score Objectives Identify the different areas of finance Discuss finance in a business organization Describe the functions of a finance officer I. Let’s Know Finance is part of everybody’s everyday life. May you be a student, a worker, or a retiree. Your day to day activities allows you to make your own financial decisions Finance is defined by the American Heritage Desk Dictionary, as the management of money, banking, investments, and credit. It directly suggests that finance is directly related to money or to a business activity that primarily deals with money transactions. Finance can also be defined as both Science and art of managing money. (Gitman & Zutter, 2012). It is both Science and Art of the correct application of the economic and accounting concepts and principles that define the system, structure, and process of management, allocation, and utilization of financial resources, investment, and expenditures. Finance is said to be a Science because Finance uses factual information in financial activities. And it is said to be an Art because finance will continue to evolve in the future due to new developments and trends in business practices. Finance is concerned with decisions about: BUDGETING is a process of preparing a financial budget. In your case as a student, how much of your allowance do you spend? Or do you save money? The amount of money you try to spend in a day and the amount of money you wanted to save is a form of budgeting. SOURCE OF FUNDS in finance can be short term or long term funds. Single proprietors and rich members of the family and friends can be tapped in the event that you will open a business and needs funds. In your case as a student the most common source of funds will be your parents, borrowing from a friend, given by your aunts/uncle or grandparents, pawnshops, bank, or even 5/6. 1 Did you know that Finance has many areas? Let us discuss the suggested division of finance as illustrated below; Finance Private Finance Public Finance Personal Finance Business Finance Financial Financial Capital Market Management Investments ❖ AREAS OF FINANCE There are two classifications of Finance. Private Finance is the management of financial resources of private individuals, non- governmental organizations and private organizations. Public Finance, on the other hand, is an allocation of government income generated from their taxation or borrowings. Private finance is subdivided into two; these are Personal and Business Finance. (Aduana, Business Finance) Personal Finance is all about the management of personal resources of a person/ individual. (Aduana, Business Finance) Business Finance is into taking care of and overseeing of money related assets of a business organization. It has three major divisions: the financial management, capital management, and financial investment. Now let us discuss each division of Business Finance. Financial Management focuses on capital budgeting decisions or investment decisions. The main goal is to maximize the value of shareholders’ wealth. (Cayanan) Capital Market is an area of finance that studies the different financial institutions and its functions that can provide assistance to private and public borrowers of funds. Financial Investment focuses on business decisions about the value and price of stocks and bonds. 2 ❖ FINANCE IN A BUSINESS ORGANIZATION From the illustration (Business Finance, SHS PNU) let us discuss one by one the role they play in a corporate organization: ▪ Shareholders – Each shareholder has one voting right and they elect the Board of Directors (BOD). ▪ Board of Directors – Their responsibility is to carry out the objective of the shareholders. Their responsibility includes: o Setting policies on investment, capital structure, and dividend policies. o Appointing and removing members of the top management o Approving company’s goals, budget, and strategies. ▪ President (Chief Executive Officer) – The President or CEO’s roles vary from one company to another. Some of the basic responsibilities of the CEO include the following; oversees the operation of the company thus ensuring that strategies approved by the board are implemented; represents the company in all activities such as professional, social and civic activities and the CEO ensures all the areas of management: planning, organizing, staffing and controlling. ▪ VP for Marketing – The VP for marketing’s responsibilities includes formulating marketing strategies of the organization, directing company sales, analyzing market and competitor, evaluating marketing methods used, and heading the marketing research. ▪ VP for Production – The VP for production ensures that production meets customer demands, comes up with a production plan, identifies production processes that will help the company, and identifies affordable suppliers. ▪ VP for Administration – The role of the VP for Admin is to coordinate the functions of the administration, finance, and marketing departments. He/She assist other departments in hiring employees; assist in payroll preparation, payment vendors, and collection receivables. The VP for admin also identifies the means, processes, or systems that can help the company maximize its operating costs. ▪ VP for Finance – The role of the VP for finance is to manage the finances of the company or organization. He or she is the financial traffic officer of the organization. He or She is engaged in making decisions for the business in operating, investing, and financing. The VP for finance determines the appropriate capital structure of the company. 3  A Finance Officer is engaged in making decisions for the company or the business to attain its objective at the optimum level. The decision making of a finance officer is classified into the following; 1. Operating Decisions - this includes credit and collection, checking on the level of inventory, budgeting, payment, and control of operating expenditure and daily operating decisions. 2. Investing Decisions - deals with non-current asset acquisition, investment portfolio, pricing decision of stocks and bonds, and cash flow analysis in budgeting. 3. Financing Decision- deals with equity and debt financing, cost of capital and borrowing, interest rate, and short-term and long-term borrowing. Let us now explore the qualifications of a finance officer or the VP for Finance. A finance officer must have the following qualifications: 1. He/She must have sound knowledge of accounting and economic concepts and principles. 2. Understand the operation, statistic, and marketing research profoundly. 3. Possess good communication in both oral and written forms. 4. With impressive relationships with banks and other financial institutions 5. Good relationship within the business and other functional areas of the company. 6. Obtain technical experience in finance and can provide professional judgement. 7. Ethically and morally upright and socially responsible. The Role of Financial Management 1. Financial Decision and controls – Financial managers and management play a vital role in making financial decisions over the organization or company. They use techniques like financial forecasting, profit, and loss analysis, etc. in analyzing the company’s financial status. 2. Financial Planning – The Finance officer is responsible for the planning of financial activities or the organization. They will use available data to understand the needs and priorities of the company as well as the overall situation. It also the role of the finance officer to plan and budget for the company financially. 3. Capital Management – It is the role of the financial management to estimate and allocate capital requirement of the company from time to time, makes the choice of source of funding in case of capital needs. 4. Allocation and Utilization of financial resources – Financial managers ensure that all financial resources of the company are used and invested effectively to make sure that the company is profitable, sustainable, and can operate in the long-run. 5. Cash Flow Management – It is very important for a company to have sufficient working capital and cash flow to meet its operational expenses and emergencies. It is now the role of financial management to keep track of accounts payable and receivable to make sure that there is sufficient cash flow available at all times. 6. Disposal of Surplus - Financial managers decide on how surplus or profits of the company will be utilized. It is under their control of how dividends will be distributed and how much as well as the proportion of profits that must be retained into the company. 7. Financial Reporting – It is the financial management that maintains all the financial reports related to the finance of the company. It uses a database for planning and forecasting financial activities for the company 8. Risk Management – The finance officer prepares for the company for any forecasted risk and makes necessary plans to address it. II. Let’s Perform & Practice 4  In a whole sheet of paper write down how much is your spending based on your allowance. ✓ Kindly indicate if your allowance is given to you per day or per week. ✓ If it’s daily, how much is your average daily allowance? ✓ Write down all the items you spend and the amount spent. ✓ Compute for the balance of your allowance by deducting the expenses you listed from your daily/weekly allowance. ✓ If you incurred a positive balance, what do you do with the money left? ✓ If you incurred negative, where do you usually get additional money? Particulars Amount 1. 2. 3. Total (Spending ) Less ( Allowance ) Savings ( if applicable) III. Let’s Connect / Let’s Analyze Instruction: Answer the question and support your answer by citing examples. After graduation, you decided to open a business of your own. The problem is that your capital is too small for your business. How will you intend to start your business? What will be the objective that you want to achieve in opening your business? RUBRIC FOCUS CONTENT ORGANIZATION 4 Distinct and sharp point made Substantial, specific and Sophisticated arrangement about the topic illustrative content of idea demonstrating a robust idea 3 Apparent point made about Functional arrangement of Generic use of ideas utilized the topic content that sustains a logical in words and sentences in order with some evidence of creating the essay transitions 2 No apparent point but shows Limited content with Confused or inconsistent evidence of a particular topic inadequate explanation arrangement of content thoughts 1 Minimal evidence of the Minimal and superficial content Minimal control of the topic content arrangement 5 IV. Let’s Answer (10 minutes) Instruction: Choose the letter of the correct answer. 1. Which area of finance whose function is to manage the financial resources of private individuals, non-government organizations, and private organizations? A. Private Finance B. Public Finance C. Personal Finance D. Business Finance 2. This is one of the financial decisions of the Corporate Finance Officer that includes the acquisition of non-current assets, investment portfolios, and pricing decisions of stocks and bonds? A. Financing Decisions B. Investing Decisions C. Operating Decisions D. Financial Decisions 3. Part of the corporate organization wherein they elect the board of directors and entitled to one voting right. A. Shareholders B. Board of Directors C. Vice President D. President 4. A division of Business Finance that answers the question, what kind of assets shall we acquire? A. Capital Market B. Financial Management C. Financial Investment D. Personal Finance 5. An area in finance that focuses on handling and managing of financial resources of a business organization? A. Public Finance B. Private Finance C. Business Finance D. Personal Finance 6 V. Let’s Explore / Let’s Create Instruction: Search on the internet for a business organization/company that has been or currently involved in a corporate accounting scandal. You are going to assess the organization/ company based on the following: ✓ Company profile, total assets, and revenues ✓ How the scandal happened ✓ The amount of money involved ✓ People who were involved ✓ Individuals who were affected As a finance student, what do you think is the impact on the organization/company based on the scandal they are facing? What are the measures that you will do if given the chance you are the Finance Officer of the company? And, how will you address and handle affected individuals that will be affected by the situation? RUBRICS SCORE 4 3 2 1 MAIN IDEA Clearly presents the There is the main Vague sense of the No main main idea and idea supported main idea. idea support it throughout throughout most the assignment of the assignment CONTENT The topic is well The subject is The idea is present Content presented, well presented, but the content isn’t isn’t developed, and however lacks sound and solid. sound. supported with evidence and Only few evidence specific evidence facts was presented and facts. ORGANIZATION All paragraphs have Most paragraphs Some paragraphs The clear ideas with have clear ideas have clear ideas but paragraphs smooth transitions but lack good transitions are weak. lack clear transitions ideas. FOCUS The purpose is clear. Not clearly stated Shows limited No the aim of the awareness of the awareness discussion purpose of the discussion Writer: Evaluator: ELFE M. AU QUENNIE GUMALAWE Teacher III Master Teacher II Daniel R. Aguinaldo National High School Crossing Bayabas National High School References: Cecchetti, Stephen G. Money, “Banking and Financial Markets”, 2nd Edition. 2010, 177-78 Gitman, Lawrence J.” Principles of Financial Management”. New York: Pearson 2014, 85-109 Melicher, Ronald W. and Norton,Edgar A. Introduction to Finance, Markets, Investments and Financial Management, 14th Edition. Canada: McGraw-Hill Ryerson Higher Education, 2014,210-255 Nick Aduana “Business Finance”. (2017, Aduana Nick).20 -37 7  ANSWER KEY II. Let’s Perform & Practice The following should be checked in their answers 1. The list of expenses of the student 2. The list of expenses can be weekly or monthly 3. The allowance of the student, let the student indicate if it is weekly or daily 4. Let the student compute the expenses minus the allowance 5. The student must give an answer if they incurred negative, what are the things they will do 6. If they incurred positive, what they will do to the money left. Particulars Amount 1.Snacks 2.Fare 3.Photocopy Total (Spending ) Less ( Allowance ) Savings ( if applicable) III. Let’s Connect / Let’s Analyze The following should be checked in their answers 1. The nature of the business 2. The objectives of the company or the business (the student can indicate a short term or long- term objectives) 3. The positioning of the business in the market. 4. The course of action to generate additional funds for the business. 5. The student can also indicate how he or she will pay for the additional funds that he or she will be borrowing. IV. Let’s ANSWER 1. A 2. B 3.A 4.B 5. C V. Let’s Explore / Let’s Create The following should be checked in their answers 1. The company profile 2. The company total assets and revenue 3. The scandal that the company was involved. 4. The people involved in the corporate accounting scandal 5. The effect towards the employees of the company. 6. The point of view of the student acting as a finance officer 7. The solution of the student acting as a finance officer 8