Lesson 1: Introduction to Business Finance Flashcards
Is the process of raising funds or capital for
any kind of expenditure. It is the process of
channeling various funds in the form of
credit, loans, or invested capital to those
economic entities that most need them or
can put them to the most productive use.
finance
Is a process of looking at a business’ estimated
incomes and expenditures
over a specific period in the future.
budgeting
(the money that comes into the business
from selling products and services
incomes
the money that goes out form paying expenses and
bills
expenditures
an asset acquired or invested in to build
wealth and save money from the hard earned
income or appreciation.
investment
The act of distributing
resources into something to generate income
or gain profits.
investment
Refers to the funds that are being used to fund the
specific transaction in hand.
source of funds
The origin of the funds
used for the transactions or activities that occur
within the business relationship or occasional
transaction.
source of funds
a security that represents the ownership of a fraction of the issuing corporation
stocks
stocks are also known as
equity
units of stock are called
shares
they oversee the financial health
of an organization and help ensure its
continued viability.
financial managers
They supervise important
functions, such as monitoring cash flow,
determining profitability, managing expenses
and producing accurate financial information.
financial managers
3 roles of financial managers
raising funds, understanding capital markets, allocating funds, profit planning
Is the practice of handling a company’s finances in a
way that allows it to be successful and compliant
with regulations. That takes both a high-level plan
and boots-on-the-ground execution.
financial management
financial management takes
both a high-level plan and boots-on-the-ground execution
2 types of factors that influence market price
controllable by management; uncontrollable external factors
what are the factors that influence market price that are controllable by management
profitability; having a good liquidity and reasonable leverage position; dividents; competent management which affects the company’s operating efficiency; coming up with corporate plans that improve the business prospects of the company
what are the factors that influence market price that are uncontrollable external factors
macroeconomic conditions; political stability; prospects of the industry where the company operates; general market sentiment; flow of foreign funds invested in the philippine stock market
nothing but an uncertain event that might
damage your assets
risk
financial risks create
a loss of finance
finance can be defined as the
science and art of managing money
deals with that decisions that are supposed to
maximize the value of shareholder’s wealth
financial maanagement
goal of financial management
maximize the value of shares of stocks
responsible for making the decisions for the
company that would lead towards shareholder’s wealth maximization.
managers of a corporation
managers of the company make decisions for the
interest of the board of directors
the board of directors make decisions for the
interest of the shareholders
each individual in a corporate organization should have an objective of
shareholders wealth maximization
