ABM Flashcards
- may be defined as “a course of action aimed at ensuring that the organization will achieve its objectives.
Strategy
- refers to “the management function of anticipating the future and determining the best courses of action to achieve company objectives.
Planning
- refers to “the process of determining the major objectives of an organization and defining the strategies that will govern the acquisition and utilization of resources to achieve these objectives.”
Strategic Planning
– may be defined as the study of the
acquisition and investment of cash for the purpose of
enhancing value and wealth.
Finance
2 Categories of Finance
PUBLIC FINANCE
PRIVATE FINANCE
3 Category of Private Finance
- Personal Finance
- The finance of non-profit organizations,
- Business finance
is that category of general
finance , which deals with the revenue and
expenditure patterns of the government and their
various effects on the economy
PUBLIC FINANCE
is concerned with
the fundamentals of managing one’s
own personal money affairs.
The finance of non-profit
organizations includes private
undertakings such as charity, religion,
and some private educational
institutions
PERSONAL FINANCE
This category deals with the area
PRIVATE FINANCE
Fundamental Concepts and Tools of
Business Finance
Basic Concepts
- The goals of Business Finance
- The Financial Statement
- The Budget
- Significance of Financial Statements
and Budgets
It refers to the provision of money for commercial
use
Business FINANCE
The Goals of Business Finance
- Maximizing profit;
- maximizing profitability;
- maximizing profit subject to cash constraint
- maximizing net present worth and
- seeking an optimum position along a riskreturn frontier.
means realizing the highest
possible peso or dollar income.
MAXIMIZING PROCESS
This concept indicates
that money increases in value with the passing of
time . A peso today could be deposited in a bank
and made to earn interest. This capacity to earn
makes the peso today worth more than the peso
that would be received in the future
TIME VALUE OF MONEY
- means realizing the highest
possible peso or dollar income.
Maximizing Profit
are those that present
financial information to various interested parties.
FINANCIAL STATEMENT
Various types of financial Statements
- The balance sheet
- The profit and loss statement
is the statement produced
periodically , normally at the end of a financial
year, showing an organization’s assets, liabilities,
and the interest of the owners.
The Balanced sheet
ection of the balance
sheet shows everything that the firm owns and
which has the monetary value.
Assets
Assets are classified into four item
CURRENT ASSETS
TRADE INVESTMENTS
FIXED ASSETS
INTANGIBLE ASSETS
It shows the profile of the debts of the
company
LIABILITIES
LIABILITIES are classified into several items:
Accounts Payable
Loans and Notes Payable
Advances from customers
Accrued Expenses
Mortgage Payable
Bonds payable
These are composed of cash,
bank deposits, and other items readily convertible into
cash like accounts receivable, stocks and work-inprocess, and marketable securities;
CURRENT ASSETS
These items show the firms
ownership of property like land, buildings, plan and
machinery, equipment, vehicles, furniture and fixtures,
all valued at cost less depreciation written off
Fixed Assets
These items present goodwill,
patents, copyright which are attributed to the firm.
Intangible assets
Awareness of the environment where the
business operates provides a better
perspective to the one making
decisions relating to the finance
function.
FINANCIAL MARKETS
It refers to lending by ultimate
borrowers with no intermediary.
DIRECT FINANCE
Methods of Direct Financing
- Private placements;
- Brokers and dealers ; and
- Investment brokers .
refers to the selling of securities
by private negotiation directly to insurance companies,
commercial banks, pension funds, large –scale
corporate investors, and wealthy individual investors
PRIVATE PLACEMENT
is one who acts an intermediary between
buyers and sellers but does not take tile to the
securities traded.
A broker
is one who is in the security
business acting as a principal rather than an
agent.
A Dealer
refers to lending by an ultimate
lender to a financial intermediary that then relends to
ultimate borrowers. Financial intermediaries include
commercial banks, mutual savings banks, credit
unions, life insurance companies, and pension funds
Indirect Finance
6 Classification of Financial Markets
- Primary market
- secondary market
- money market
- capital market
- bond market
- stock market
THE FOUR P’S
Product
Price
Promotion
Place
