FINANCIAL MANAGEMENT

SESSION 1 What to learn

Asynchronous
I. PROGRAM EDUCATIONAL OBJECTIVES
Within three years after graduation, the graduates of Bachelor of Accountancy shall:
a. Show the ability to synthesize knowledge continuously in solving problems for the
improvement of life.
b. Perform work responsibly guided by the institution’s core values
c. Engage in career advancements for professional development
d. Actualize high ethical standards in working singly or collaboratively.

II. BSA PROGRAM EDUCATIONAL OUTCOMES

a. Resolve business issues and problems, with a global and strategic perspective
using knowledge and technical proficiency based on the Strategic Management.
b. Conduct business research through independent studies of relevant literature and
appropriate use of Strategic Management.
c. Employ technology as a business tool in capturing financial and non-financial
information, generating reports and making decisions.
d. Apply knowledge and skills that will successfully respond to various types of
assessments including professional licensure examinations.
e. Confidently maintain a commitment to good corporate citizenship, social
responsibility and ethical practice in performing functions as an accountant.

III. EXPLANATION OF THE LESSONS

Objectives:
 Describe the concept of financial management and its importance in achieving corporate
objectives
 Identify the roles of finance managers and how they influence other business functions.
 Identify the goal of the firm, corporate governance, the role of ethics and the agency issue.

Financial Management is about preparing, directing and managing the money activities of a
company such as buying, selling and using money to its best results to maximize wealth or
produce best value for money.
The key objectives of the financial management would be to create wealth for the business,
generate cash and provide an adequate return on investment bearing in mind the risks the
business is taking, and the resources invested.
Personal finance deals with an individuals’ decision concerning the spending and investing of
income.
Business finance focusing on how the firms raise money from investors, how to invest money to
earn a profit, and how to reinvest profits in the business or distribute them back to investors.

Three Key elements to the process of financial management

1. Financial Planning. Management needs to ensure that enough funding is available at the
right time to meet the needs of the business.

2. Financial control. Helps the business ensure that the objectives are being met.

3. Financial decision making. The key aspects of financial decision-making include investing,
financing and dividends.

Finance Areas and Career Opportunities

The following are the major areas in the field of finance:
1. Financial Service – the one concerned with the design and delivery of advice and financial
products to individuals, businesses and governments.
Career Opportunities: within the areas of banking, personal financial planning, investments, real
estates and insurance
2. Managerial Finance – concerned with the duties of the financial manger working in a
business. This encompasses financial planning or budgeting, extending credit to customers or
other credit administration function.

Career Opportunities: financial analyst, capital budgeting analyst and cash manager.

Legal Forms of Business Organization

TYPES ADVANTAGE DISADVANTAGE

PROPRIETORSHIP 1. Ease of entry and exit 1. Unlimited liability

2. Full ownership and control 2. Limitations in raising

 capital

3. Tax savings 3. Lack of continuity

4. Few government
regulations

PARTNERSHIP 1. Ease of formation 1. Unlimited liability

2. Additional sources of 2. Lack of continuity

capital

3. Management base 3. Difficulty of transferring

ownership

4. Tax implication 4. Limitations in raising

capital

CORPORATION 1. Limited liability 1. Time and cost of formation

2. Unlimited life 2. Regulation

3. Ease in transferring 3. Taxes

ownership

4. Ability to raise capital

Finance and Accounting

One of the major differences in the focus of finance and accounting is that accountants
generally use the accrual method while in finance, the emphasis is on cash flow. Accountants
recognized revenues at the point of sale and expenses when incurred regardless on when cash
will flow into or out of the firm. On the other hand, the financial manager focuses on the actual
inflows and outflows of cash, recognizing revenues when cash is collected and expenses when
actually paid.
Goals of the Firm and the Role of the Finance Manager
Decision rule for managers:
“Only take actions that are expected to increase the share price!”
This means that whenever the financial manager decides or choose between or among
alternatives, after assessing the risks and the returns, only actions that would increase share
price shall be accepted. Otherwise, the alternative/s shall be rejected.

The two key activities that the financial manager does as relate to a firm’s balance sheet are the
following:
1. Investment decisions. The finance manager defines the most efficient level and the best
structures of assets. Investment decisions deals with the items that appear on the asset section
of the balance sheet.
2. Financing decisions. The finance manager determines and maintains the proper combination
of short – and long-term financing. Also, he raises the needed financing in the most economical
manner. Financing decisions generally refers to the items that appear on the liability and equity
section of the balance sheet.

Other Important Terms

Corporate Governance. It is a system of organizational control that defines and establishes the
responsibility and accountability of the major participants in an organization. Shareholders,
board of directors, managers and officers of the corporation and other stakeholders are the
major participants included here.
Business Ethics. These are the standards of conduct or moral judgment that apply to the
persons engaged in industry or commerce. Violations of these standards in finance include, but
not limited to misstated financial statements, misleading financial forecasts or projections,
fraud, bribery, kickbacks, insider trading, excessive executive compensation and options
backdating.
Shareholders are the owners of a corporation and they purchase stocks because they want to
earn a good return on their investment without undue risk exposure.

IV. RECORDED TEACHINGS

Introduction to Financial Management

 [Link]

V. READ AND LEARN MORE

 Read Chapters 1 – 4, Financial Management, Principles and Applications by Maria
Elenita Cabrera, 2021-2022 Edition

VI. RESEARCH ANALYSIS

Discussion Questions: Answer the following questions and submit in Neo.
 What is the purpose of financial management?
 Describe the kinds of activities that financial management deals with.
 What is the difference in perspective between finance and accounting?
 Does knowledge of financial theory and statistical approaches give a manager all the
answers in solving financial problems? Explain

VII. LINKS

Financial Management – Meaning, Objectives and Functions.

[Link]

VIII. WANT TO ASK QUESTIONS

Everyone is encouraged to ask questions for clarifications. This is to facilitate greater
understanding of the topic discussed. Please provide your question (at least one) on the
space provided.

Part one

SESSION 2 What to learn

Synchronous
 I. MOTIVATION

Watch the youtube video regarding the introduction to financial management and write 10
important words/phrase that you remember.

[Link]

II. ARTICULATION AND PURPOSES AND OBJECTIVES

Program Educational Objectives

Within three years after graduation, the graduates shall:
a. Show the ability to synthesize knowledge continuously in solving problems for the
improvement of life.
b. Perform work responsibly guided by the institution’s core values
c. Engage in career advancements for professional development
d. Actualize high ethical standards in working singly or collaboratively.

BSA Program Education Outcomes

a. Resolve business issues and problems, with a global and strategic perspective using
knowledge and technical proficiency based on the Philippine Accounting Standards.
b. Conduct business research through independent studies of relevant literature and
appropriate use of Philippine Accounting Standards.
c. Employ technology as a business tool in capturing financial and non-financial
information, generating reports and making decisions.
d. Apply knowledge and skills that will successfully respond to various types of
assessments including professional licensure examinations.
e. Confidently maintain a commitment to good corporate citizenship, social responsibility
and ethical practice in performing functions as an accountant.

Course Outcome #1
The student should be able to learn the following topics:
 Definition and objectives of financial management
 Role of financial management in business
 Relationship of finance with other relevant disciplines
 Legal forms of business

 organization
 Finance organization and career opportunities in finance
 Interface between finance and other functions

Learning Objectives
 The Learner shall be able to:
 Describe the concept of financial management and its importance in achieving corporate
objectives.
 Identify the roles of finance managers and how they influence other business functions.
 Identify the goal of the firm, corporate governance, the role of ethics and the agency issue.

III. DEVELOPMENT OF THE LESSON

A scheduled video conference shall be conducted by your professor. The topic shall then
be discussed on the choice of video conferencing application. The discussion shall be
guided by the following objectives as follows:

OBJECTIVE 1: Describe the concept of financial management and its importance in

achieving corporate objectives

OBJECTIVE 2: Identify the roles of finance managers and how they influence other business
functions.

OBJECTIVE 3: Identify the goal of the firm, corporate governance, the role of ethics and the
agency issue.
The following power point presentation shall be discussed:

IV. 6 FACETS OF UNDERSTANDING QUESTIONS

Financial Management is a possible career an accounting graduate can be applied to,
identify the major areas and opportunities available in the field of finance.
Write your answer on the space provided:
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
_____________.

V. EXPLANATION APPLICATION REFLECTION (EAR)

Direction: Compose an essay for each of the following: Explanation, Application and
Reflection. Write your answer on the space provided. Avoid erasures.

Explanation:
a. state the generalization of the lesson
b. integrate/connect the learned knowledge with the previous learned
knowledge to form own interpretation, perspective, analysis and evaluation.

Application:
 a. relate the lesson to the current issues, trends and problems in the community,
in the country and the entire world.
b. Create plan of action or solution to the problem using explanation of the
lesson.

Reflection:
a. state how the FCPC vision, mission, core values, 21 st century skills and program
outcomes are realized in the application of the learned knowledge and skills.

Note: EAR written outputs must be 90 -100 words.

____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________.

Assignment Material:
Read the following attached case study in Appendix I and answer the questions.

VI. FORMATIVE ASSESSMENT

True or False

1. Financial management is concerned with allocating, raising and controlling the funds of the firm.
TRUE or FALSE
2. Financial managers actively manage the financial affairs of many types of business-financial and
non-financial, private and public, for-profit and not-for-profit. TRUE or FALSE
3. Managerial finance is concerned with design and delivery of advice and financial products to
individuals, business, and government. TRUE or FALSE
4. Corporate shareholders have unlimited liability. TRUE or FALSE
5. A corporation is characterized by separate legal existence, transferability of ownership and
limited liability. TRUE or FALSE
6. He or she is the one responsible in making investment, financial, and dividend policy-making
decision of a firm.
a. Stockholder
b. Finance manager
c. Employee
d. Creditor

7. Marginal analysis states that financial decisions should be made and actions should be taken
only when
a. Benefits equal costs
b. Added benefits exceed added costs
c. Added benefits are greater than zero
d. Marginal revenue equals marginal costs
 8. The primary goal of a financial manager is _____.
a. Minimizing risk
b. Maximizing profit
c. Minimizing return
d. Maximizing wealth

9. It is concerned with allocating, raising and controlling the funds of the firm.
a. Finance
b. Management accounting
c. Financial management
d. Budgeting

10. Which of the following statements is an advantage of a sole proprietorship?

a. It cannot raise a large amount of capital

b. It has unlimited liability
c. The life of the business is dependent on the life of the owner
d. It is easy to make a decision

VII. GENERALIZATION

Determine the roles of a financial manager.

SESSION 3 Assess My Learning

Asynchronous
I. PRACTICAL TEST
Answer the multiple-choice theory below:

1. It is one of the objectives of financial management.

a. Maximize earnings
b. Maximize cash flows
c. Maximize the size of the firm
d. Maximize firm value/stock price

2. The choice to issue chares of stocks or long-term bonds fall under

a. Investment decision
b. Dividend decision
 c. Financing decision
d. None of the above

3. The issuance of commercial paper is in the area of

a. Investment decision
b. Dividend decision
c. Financing decision
d. None of the above

4. Which of the following is true about the finance managers as compared with the accountants?

a. They devote attention primarily to decision making through analysis of financial data.
b. they operate on an actual basis, recognizing revenues at the point of sale and expenses when
incurred
c. they focus on the actual inflows and outflows of cash, recognizing revenues when actually
received and expenses when actually paid.
d. All of the above.

5. Which of the following is the best measure to ensure that management decisions are in the best
interest of stockholders?

a. Fire managers who are inefficient

b. Remove management’s perquisites
c. Tie management compensation to the level of dividend per share
d. Tie management compensation to the performance of the company’s common stock price

6. In planning and managing the requirements of a firm, the financial manager is concerned with

a. The mix and type of assets, but not the type of financing utilized
b. The type of financing utilized, but not the mix and type of assets
c. The mix and type of assets, the type of financing utilized, and analysis in order to monitor the
financial condition

The acquisition of fixed assets, allowing someone else to plan the level of current assets to
required, and the market value of the share.

7. By concentrating on cash flows within a firm, the financial manger should be able to

a. Avoid insolvency
b. Prepare tax returns
c. Control the share price
d. Maintain public relations

8. Finance is _____.

a. The art and science of managing money

b. The art of merchandising products and services
 c. The system of verifying, analyzing, and recording business transaction
d. The science of the production, distribution, and consumption of goods and services

9. Which of the following is a duty of a financial manager in a business firm?

a. Auditing financial records

b. Raising financial resources
c. Controlling the stock price
d. Developing marketing plans

10. Corporate owners receive return ______.

a. Through interest earnings and earnings per share

b. Through capital appreciation and retained earnings
c. By realizing gains through increases in share price and cash dividends
d. By realizing gains through increases in share price and interest earnings

II. LEARNING ASSESSMENT

True or False
Directions: Read each item carefully and identify if the particular statement is true or
false. Write your answer in the blank space provided.

1. The money market is created by financial relationship between the suppliers and demanders of short-
term debt securities maturing one year or less.

2. The primary economic principle used in managerial finance is marginal cost-benefit analysis, the
principle that financial decisions should be made, and actions taken only when the added costs exceed
the added benefits.

3. The issuance of commercial paper is in the area of investment decision.

4. Finance is concerned with the process institutions, markets, and instrument involved in the transfer of
money among and between individuals, businesses and government.

5. The purchase of a new plant or properties for an expansion program is in the area of financing
decision.

6. The corporate controller is the officer responsible for the firm’s accounting activities, such as
corporate accounting, tax management, financial accounting, and cost accounting.

7. One advantage of forming a corporation is that you have limited liability.

8. Corporations face fewer regulations than sole proprietorships.

9. One disadvantage of being a sole proprietor is that you should pay corporate taxes, even though you
don’t realize the benefits of being a corporation.

10. Corporations generally face fewer regulations than sole proprietorships do.

III. REFERENCES
Textbook:
Financial Management Principles and Applications, 2021-2022 Edition
Ma. Elenita Balatbat Cabrera
Gilbert Anthony B. Cabrera
Bernadette Ann B. Cabrera

Prepared by: Julianito Paja Jr, CPA