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    Financial Management

    Uploaded by

    Reymart Castillo Hamo
    report in financial management: financial institution, financial markets... based on teacher's manual

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Financial Management

    Uploaded by

    Reymart Castillo Hamo
    3K views25 pages
    report in financial management: financial institution, financial markets... based on teacher's manual

    Original Title

    FINANCIAL MANAGEMENT

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    © © All Rights Reserved

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    report in financial management: financial institution, financial markets... based on teacher's manual

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    3K views25 pages

    Financial Management

    Uploaded by

    Reymart Castillo Hamo
    report in financial management: financial institution, financial markets... based on teacher's manual

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 25

    INTRODUCTION

    TO FINANCIAL
    MANAGEMENT
    2

    1.
    DEFINITION OF
    FINANCE
    3

    Finance
    “art and science of managing money”

    A part of it is budgeting, an act of estimating revenue and


    expenses over a period of time.
    4

    FINANCIAL MANAGEMENT
    “deals with the decisions that are supposed
    to maximize the value of shareholders’
    wealth”

    Shareholders’ wealth is Market Price is the current


    measured based on the price at which an asset or
    current market market price service can be bought or sold
    of the corporation’s stock and can be influence by
    factors that can or can not be
    controlled by the
    management
    5

    The Decisions made will affect the markets


    perception of the company and influence
    the share price.

    The goal of Financial management is to


    maximize the value of shares of stocks.

    Managers of a corporation are responsible


    for making the decisions for the company
    that would lead towards shareholders’
    wealth maximization.
    6

    2.
    THE FINANCIAL
    MANAGER
    8

    FOUR FUNCTIONS OF A FINANCIAL


    MANAGER (VP for Finance)
    1. Financing 2. Investing
    Determine the Investments may
    appropriate capital be:
    structure, which a. Short term - when
    refers to how much the company is in
    of your total assets excess of cash
    is financed by: position.
    a. Debt b. Long term - should
    b. Equity be supported by
    capital budgeting.
    9

    FOUR FUNCTIONS OF A FINANCIAL


    MANAGER (VP for Finance)
    3. Operating 4. Dividend Policies
    Determine how To determine when
    to finance working the company should
    capital needs, declare dividends
    whether by long
    term or short term
    sources.
    10

    3.
    THE FINANCIAL
    INSTRUMENTS
    11

    FINANCIAL INSTRUMENTS

    Is a real or a virtual document representing


    a legal agreement involving some sort-of
    monetary value.

    When a financial instrument is issued, it gives


    rise to a financial asset on one hand and a
    financial liability or equity instrument on the
    other.
    12

    When the companies in need of funding, they


    either sell debt securities (bonds) or issue equity
    instruments.
    Suppliers of Funds
    - Holders of financial asset
    - The one who bought the financial
    instrument
    Users of Funds
    - Makers of Financial Liabilities and Equity
    Instruments
    - The one who sold a financial instrument.
    13

    EXAMPLES (DEBT INSTRUMENT)

    1. Treasury bonds and Treasury


    Bills
    2. Corporate Bonds

    EXAMPLES ( EQUITY INSTRUMENT)

    1. Preferred Stock
    2. Common Stock
    14

    4.
    FINANCIAL
    INSTITUTIONS
    15

    FINANCIAL INSTITUTIONS

    intermediaries that channel the savings of


    individuals, businesses, and governments
    into loans or investments
    16

    EXAMPLE OF FINANCIAL
    INSTITUTIONS

    1. Commercial Banks
    2. Insurance companies
    3. Mutual funds
    4. Pension Funds
    5. Other Financial Institutions
    18

    5.
    FINANCIAL MARKETS
    19

    FINANCIAL MARKETS

    organized forums in which the suppliers


    and users of various types of funds can
    make transactions directly
    20

    CLASSIFICATION (COMPARATIVE
    GROUPS) - PRIMARY VS.
    SECONDARY
    PRIMARY MARKET SECONDARY MARKET
    - Where securities - In which pre-owned
    are initially issued. securities are
    - Issuer is directly traded.
    involved.
    - Can be:
    a. Public Offering
    b. Private
    Placement
    21

    CLASSIFICATION (COMPARATIVE
    GROUPS) - MONEY & CAPITAL
    MONEY MARKET CAPITAL MARKET
    - Wherein securities - Securities with
    with short-term long-term
    maturities ( 1 yr or maturities.
    less) are sold. - Bonds and both
    - Those with idle common and
    funds to Invest in a preferred stock.
    safe, interest
    bearing asset.
    - Seasonal or
    temporary
    financing.
    22

    6.
    FINANCIAL SYSTEM
    23

    FINANCIAL SYSTEM

    A system that allows the exchange of


    funds between lenders, investors, and
    borrowers.
    Financial systems operate at national
    or global level.
    25

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