FINANCIAL
MANAGEMENT
Amable, Heaven Jake B.
Catugo, Honey Vhal Jed P.
BSCpE – 4A
Subtopics:
• Difference between Accounting and Finance Functions
• Functions and Objectives of Financial Management
• Role and Scope of Financial Management
• Mechanics of Accounting
• Standard Forms of Financial Statement
Objectives
At the end of the discussion, listeners will be able to:
• Discern and know the value of Accounting and Finance
• Explore the basic Concepts behind Financial Management and;
• Understand Financial Statement and Mechanics of Accounting
WHAT IS
FINANCIAL
MANAGEMENT?
Financial Management is a decision making
process concerned with planning, acquiring and
utilizing funds in a manner that achieves the firm’s
desired goals.
It is also described as the process for and the
analysis of making financial decisions in the business
context.
Difference between Accounting and Finance Functions
Accounting discharges the function of systematic
recording of transactions relating to the firm’s activities
in the books of accounts. However, finance is a body of
facts, principles and theories relating to using and raising
money of individuals, businesses and governments.
FUNCTIONS AND OBJECTIVES
OF
FINANCIAL MANAGEMENT
1 Primarily, financial management is meant to
maximize the current value per share of the existing stock
or ownership in a business firm.
2 Since financial management is designed for
maximization of the current value of the shares, then there
is a need to learn on how to identify investments,
arrangements and distribute satisfactory amounts of
dividends in the profits that favorably impact the value of
the share (s).
3 The goal does not imply that the financial manager
should take illegal or unethical actions in the hope of
increasing the value of equity in the firm. The financial
manager should best serve the owners of the business by
identifying goods and services that add value to the firm
because they are desired and valued in the free market
place.
Role and Scope of
Financial
Management
Traditionally, the role and scope of financial
management is concerned with acquisition, financing and
management of assets of business in order to maximize the
wealth of the firm for its owner. Also it may involves
governing of financial flows which enable a business to
survive and somehow obtain and retain healthy profits.
MECHANICS
of
ACCOUNTING
Accounting Mechanics is essential to every accountant
because it enables the collection and recording of accounting
data as preparation on making financial statement.
There are eight (8) steps in accounting cycles including
unadjusted trial balance, the worksheet, identifying transactions,
entering transactions in a journal, posting, modifying journal
entries, preparing financial statements, and closing the books
LEDGER
TRIAL BALANCE
• ASSETS
• LIABILITIES
• EQUITY
• DRAWINGS
• REVENUES
• EXPENSES
Standard Forms of
FINANCIAL
STATEMENT
FINANCIAL STATEMENT?
Financial Statement provides crucial input for strategic
planning, as well as, information about the relative success of
those plans which can be used to corrective action and make
new operating, investing and financing decisions.
The standard forms include three important and
informative tools including statement of income, balance
sheet and statement of cash flows.
INCOME STATEMENT
An income statement displays the revenues, costs, and
profitability of a business over time. It is also sometimes
referred to as an earnings statement or a profit-and-loss
(P&L) statement. It displays your sales revenue for goods
and services, expenses for running your firm and
generating money.
STATEMENT OF CHANGES IN EQUITY
The beginning and
ending equity balances of
a corporation throughout
the course of a reporting
period are reconciled in
the statement of changes
in equity.
BALANCE SHEET
A balance sheet is a financial
statement that lists the assets and
liabilities of a corporation at a
certain point in time. It is one of the
three fundamental financial
statements that are used to evaluate
company's performance. It is also
known as statement of financial
position.
STATEMENT OF CASH FLOWS
A financial document called
the cash flow statement (CFS)
outlines the inflow and outflow of a
company's cash and cash
equivalents (CCE). The CFS gauges
how effectively a business manages
its cash position, or how successfully
it generates cash to cover its debt
payments and finance its operating
costs.
References:
Cabrera, M.A.; & Cabrera G. A. (2019).Financial management. C.M. Recto Avenue,
Sampaloc Manila, Philippines. GIC Enterprises & Co.,Inc.
Teacher Jade (January, 2023). Trial Balance. Retrieved from
https://www.youtube.com/watch?v=FCt79VpERrM.
Teacher Jade (January, 2023). Income Statement. Retrieved from https://
www.youtube.com/watch?v=DZKATCo-NSg.
Teacher Jade (January, 2023). Statement of Changes in Equity. Retrieved from
https://www.youtube.com/watch?v=LqYW-7UhO64.
Teacher Jade (January, 2023). Balance Sheet. Retrieved from https://
www.youtube.com/watch?v=DzB2Rp1noYo.
Investopedia (February, 2023). Statement of cash flow. Retrieved from
https://www.investopedia.com/investing/what-is-a-cash-flow-statement/
Thank You
for
Listening!
