3RD year midterm Flashcards
What early man’s needs was provided by its natural resources.
1st Stage- Direct Appropriation Stage
Goods and services directly exchange for other goods and services
2nd Stage- Barter/Direct
Exchange
DIFFICULTIES OF BARTER
Product do not have the same value
No double coincidence of wants
Lack of store value
It is cumbersome, inconvenient and indivisible
Some goods because of its usefulness, beauty, scarcity and rarity commands a wide acceptance as medium of exchange.
3rd Stage- The Use of Commodity as Money
(rice, corn, wheat, salt, tea, cattle)
Non-Metallic
gold, silver, copper
Metallic Money
material value is equal it’s monetary value
Intrinsic value
Money whose monetary value is more than its material or commodity value
4th Stage- Credit Money
Money comes from the Greek Word
Moneta
Anything which is used as a medium of exchange and is widely accepted for the payment of goods and services, debts and obligations within a given territory without reference to the credit standing of the person who offers it
money
mandatory law that makes money accepted in payment for all kinds of services
Legal Tender Power
any form of money which according to law is acceptable for all forms of obligations
Legal Tender Power
What are Considered Legal Tender Money in
the Philippines
Notes and coins issued by BSP
money serves as a common medium or tool of exchange.
As a Medium of Exchange
money serves as a measuring device in which value of goods and services can be expressed.
As a Standard Unit of Value
The money that we use as a medium of exchange is the same money we can use to pay for our debts and obligations
As a Standard of Deferred Payment
money has the quality to be kept or stored for future use
As a Store of Value
accepted by anyone in exchange for goods and services
General Acceptance
value must not change every now and then and not susceptible to fluctuations, devaluation, inflation, etc.
Stability
money is made light, to be easily carried from one place to another
Portability
design should not only be aesthetically beautiful but also difficult to counterfeit.
Cognizability
money must withstand longer period of time against wear and tear
Durability
divisible into small parts and likewise possible to recombine these small parts into bigger denominations
Divisibility
money can be melted and beaten into a desired shape to conform to the specification of the government
Malleability
money must conform to certain standard to avoid confusion (size, shape, and color)
Uniformity
material used must be uniform in composition throughout
Homogeneity
money that is made up of
precious metal or another valuable commodity
Commodity Money
domestic currency can only be used in its country of origin. If it is used in another country, it needs to be exchanged with the currency of the of that country.
Currency (Bills and Coins)
Generally used by businesses and persons in conducting business, as well as personal transactions
Check
relate to decisions concerning stocks and bonds and include a number of activities: (1) security analysis; (2) portfolio theory; (3) market analysis
Investments
is the system that includes the circulation of money, the granting of credit, the making of investments, and the provision of banking facilities.
Finance
also called corporate finance, focuses on decisions relating to how much and what types of assets to buy, how to raise capital needed to buy assets, and how to run the firm so as to maximize its value.
Financial Management
relate to the markets where interest rates, along with stock and bond prices are determined. Also studied are the financial institutions that supply capital to businesses.
Capital Markets
a business owned by one individual.
Sole Proprietorship
a legal entity created by a state, separate and distinct from its owners and managers.
Corporation
means planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of the enterprise.
Financial Management
It means applying general management principles to financial resources of the enterprise.
Financial Management
is generally concerned with short term working capital management, focusing on current assets and current liabilities, and managing fluctuations in foreign currency and product cycles, often through hedging.
Financial Management
is generally concerned with procurement, allocation and control of financial resources of a concern to maximize shareholder value and it deals with the monetary decisions that business enterprises make.
financial management
A finance manager has to make estimation with regards to capital requirements of the company.
Estimation of capital requirements
this involves short- term and long- term debt equity analysis. This will depend upon the proportion of equity capital a company is possessing and additional funds which have to be raised from outside parties.
Determination of capital composition
The finance manager has to decide to allocate funds into profitable ventures so that there is safety on investment and regular returns is possible.
Investment of funds
The net profits decision have to be made by the finance manager
Disposal of surplus
It includes identifying the rate of dividends and other benefits like bonus.
Dividend declaration
The volume has to be decided which will depend upon expansional, innovational, diversification plans of the company.
Retained profits
Finance manager has to make decisions with regards to cash management
Management of cash
is required for many purposes like payment of wages and salaries, payment of electricity and water bills, payment to creditors, meeting current liabilities, maintenance of enough stock, purchase of raw materials, etc.
Cash
The finance manager has not only to plan, procure and utilize the funds but he also has to exercise control over finances.
Financial controls
This can be done through many techniques like ratio analysis, financial forecasting, cost and profit control, etc.
Financial controls
In order to meet the obligation of the business it is important to have enough cash and liquidity.
Raising of Funds
It is the responsibility of a financial manager to decide the ratio between debt and equity.
Raising of Funds
The funds should be allocated in such a manner that they are optimally used.
Allocation of Funds
is one of the prime functions of any business organization.
Profit earning
is important for survival and sustenance of any organization.
Profit earning
refers to proper usage of the profit generated by the firm.
Profit planning
Shares of a company are traded on stock exchange and there is a continuous sale and purchase of securities.
Understanding Capital Markets
a projection of future sales, revenues, earnings, costs and other possible variables that are helpful in the firm’s operations
Forecasting
primary objective is to reduce the risk or uncertainty that the firm will face in making decisions
Forecasting
the starting point of business planning
Forecasting
Makes use of the forecast as a tool for long-range planning, particularly in providing a basis for performance targets, implementing long-range strategic objectives, and making capital budgeting decisions
Top Management
Utilizes the forecasts to determine the amount of raw materials that will be needed in production, the budget, schedule of production activities, inventory levels to maintain so as not to disrupt the production, labour hours, and the schedule of shipments
Production Manager
Uses the forecast to ascertain the volume or bulk of materials that should be purchased for a particular period
Purchasing Manager`
Makes use of the forecast to estimate how much sales should be made in a particular period, and to plan promotional and advertising activities for the products
Marketing Manager
Uses the forecast to anticipate the funding needed by the firm
Finance Manager
Utilizes the forecast to supply the human resource needed in achieving the firm’s objectives
Human Resource Manager
Incorporate factors such as the decision maker’s intuition, emotion, personal experiences, and value system; useful in formulating short-term forecasts.
Qualitative (or judgment) forecasts.
The views of the managers or a group with a high level of expertise, often in a combination with statistical models, are synthesized to generate a consensual forecast.
Expert Opinions
Similar to the expert opinion except that members of a group of experts are asked individually through a questionnaire about their forecast of future events
Delphi Method
Useful for long-range forecasting and the results are not by the group or by strong leadership
Delphi Method
Every sales person estimates the sales in his or her region; the responsibility of drawing up the forecast lies with the people who will actually work for the forecasted value; simple and practical
Sales Force Polling
Firms, at times, conduct their own or potential customer surveys to accumulate information regarding future purchasing plans.
Consumer Market Surveys
requires that the expert provide three estimates: pessimistic (a), the most likely (m), and optimistic (b). the theory suggests that these estimates combine to form an expected value, or forecast.
PERT-derived Forecasts
Includes measure of dispersion (the standard deviation), which makes it possible to develop probabilistic statements regarding the forecast
PERT-derived Forecasts
