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Introduction to Financial Management

This document provides an introduction and overview of financial management concepts. It begins with introducing expectations for the course and then outlines class norms and policies. Key definitions of finance are presented, including that it is the art and science of managing money. The document then discusses 3 main questions in financial management and 3 areas of finance. It outlines the roles of a financial manager and discusses agency problems and ways to reduce them. Different legal forms of business are presented along with an activity comparing them. The document concludes by outlining 10 key principles in finance and discussing good corporate governance.

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James Espanola
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39 views16 pages

Introduction to Financial Management

This document provides an introduction and overview of financial management concepts. It begins with introducing expectations for the course and then outlines class norms and policies. Key definitions of finance are presented, including that it is the art and science of managing money. The document then discusses 3 main questions in financial management and 3 areas of finance. It outlines the roles of a financial manager and discusses agency problems and ways to reduce them. Different legal forms of business are presented along with an activity comparing them. The document concludes by outlining 10 key principles in finance and discussing good corporate governance.

Uploaded by

James Espanola
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

Introduction to

Financial
Management
by Prof. Rey Neil Catague,MBA
Introduce Yourself
▸ Name
▸ Undergrad Course
▸ Present Designation and Company affiliated
▸ Expectation from this course
▸ Hobby

2
Class Norms & Policy
▸ Refer to CPU handbook
▸ Oral Presentation – Individual & Group
▸ Written Output – Individual & Group
▸ Mid Term Assessment - Individual
▸ Final Assessment - Individual

3
Finance Definition
▸ Finance is the art and science of managing money. (Mejorada
2004). According to Titman, 2010 Finance is the study of
people and businesses evaluate investments and raise capital
to fund them.

▸ Finance is defined by Webster’s Dictionary as “the system


that includes the circulation of money, the granting of credit,
the making of investments, and the provision of banking
facilities.”

4
3 Questions why Study Finance
▸ What long term investments should the firm
undertake?
▸ How long should the firm fund these
investments?
▸ How to manage cashflows on a day to day
basis?

5
3 Areas of Finance
▸ Financial Management
▸ Capital Markets
▸ Investments

6
Example of a Flattened Organization

7
Role of Financial Manager
▸ CFO/VP Finance – Finance Managers
▸ Treasurer
▸ Controller

8
Role of Financial Manager
▸ Maximizing Shareholder Wealth
▸ Maximizing Profit

9
Agency Problems in Corporate
Finance
▸ Agency is a relationship when one or more persons
contracts with one or more persons to make decision
on behalf of the principal.
▸ Managers are the Agents; stockholders and/or
shareholders are the principal

10
How to Reduce Agency Problems?
▸ Monitoring
▸ Compensation Plans
▸ Others as defined by the corporation

11
Legal Forms of Business
▸ Sole Proprietorship
▸ Partnership
▸ Corporation

12
Activity
Divide the class into 3 groups. Group 1 – Sole/Single
Proprietorship; Group 2 – Partnership; Group 3 –
Corporation.
Mr Tan is a 35 years old, single, jobless and with no
knowledge in finance. He inherited 500,000.00 from the
estate of his deceased father. Mr Tan would like to venture
into business but is fearful to do so because of his lack of
experience.

As a financial advisor how will you convince Mr Tan to


choose your form of Business?
- 10 minutes to discuss with-in your group, your strategy.
Highlight the advantage and disadvantages
- Each group to choose 1 presenter
- Each presenter has 3 minutes to convince the class that
their form of business is the best for Mr. Tan.
13
10 Principles in Finance
▸ Risk Return Trade Off
▸ Time Value of Money
▸ Cash not Profit is King
▸ Incremental Cash Flows
▸ The Curse of a competitive market

14
10 Principles in Finance
▸ Efficient Capital Markets
▸ The Agency Problem
▸ Taxes Bias Business Decisions
▸ All risks are not Equal – some can be
avoided, while others can be diversified
▸ Ethical Behavior is doing the RIGHT
THING and Ethical dilemmas are
everywhere in Finance
15
Good Corporate Governance
▸ Business Ethics
▸ Codes of Conducts
▸ Bribery & Accepting/Giving gifts

16

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