planning, organizing, directing, and controlling the financial activities, applying general management principles to financial resources.

elect board of directors Each share held is equal to one voting right

highest policy making body in a corporation is operating to serve the best interest of the stockholders.

,ensuring that the corporation i

Overseeing the operations of a company and ensuring that the strategies as approved by the board are

implemented as planned.

Formulating marketing strategies and plans. Directing and coordinating company sales. Performing market and competitor analysis.mAnalyzing and evaluating the effectiveness and cost of marketing methods applied. Conducting or directing research that will allow the company to identify new marketing opportunities. Promoting good relationships with customers and distributors.

Ensuring production meets customer demands.Identifying production technology/processes that minimize production cost and make the company cost competitive.Coming up with a production plan that maximizes the utilization of the company’s production facilities.Identifying adequate and cheap raw material suppliers.

Coordinating the functions of administration, finance, and marketing departments. Assisting other departments in hiring employees.Providing assistance in payroll preparation, payment of vendors, and collection of receivables.Determining the location and the maximum amount of office space needed by the company. Identifying means, processes, or systems that will minimize the operating costs of the company.

takes care of all the important financial functions of an organization,

maintain a fair-sightedness in order to ensure that the funds are utilized in the most efficient manner. Actions directly affect the profitability, growth, and goodwill of the firm.

firm can raise funds by the way of equity and debt.

funds should be allocated in such a manner that they are optimally used.

one of the prime functions of any business organization

shares of a company are traded on stock exchange and there is a continuous sale and purchase of securities

companies in the financial sector that provide a broad range of business and services including banking, insurance, and investment management.

are allowed to accept monetary deposits from the consumers legally

accepts deposits from the public and offers security to their customers.

serve as the intermediary between the savers and the borrowers, but they do not accept the time deposits.

perform the function of accepting the savings from the individuals and lending to the other consumers.

associations that are created, owned, and also operated by the participants who are voluntarily associated with saving their money rather than lending it to members of their union only.

collect the funds of many of the small savers and then lend them to home buyers or other types of borrowers.

individuals purchase insurance (life, property, and casualty, and health) protection with insurance premiums.

owned by investment companies that enable small investors to enjoy the benefits of investing in a diversified portfolio of securities purchased on their behalf by professional investment managers

receive payments from employees and invest the proceeds on their behalf

a real or a virtual document representing a legal agreement involving some sort of monetary value. These can be debt securities like corporate bonds or equity like shares of stock

contractual right to exchange instruments with another entity under conditions that are potentially favorable.

Is any liability that is contractual obligation. To deliver cash or other financial instruments to another entity. To exchange financial instruments with another entity under conditions that are potentially unfavorable.

Is any contract that evidences a residual interest in the assets of an entity after deducting all liabilities

fixed returns due to fixed interest rates

varied returns based on the performance of the issuing company. Returns from equity instruments come from either dividends or stock price appreciation

holders have priority over a common stock in terms of claims over the assets of a company

holders are the real owners of the company

refers to a marketplace, where creation and trading of financial assets take place.

trades shares of ownership of public companies

offers opportunities for companies and the government to secure money to finance a project or investment

traders and investors buy and sell natural resources

involves derivatives or contracts whose value is based on the market value of the asset being traded

financial marketplace where financial instruments, such as options and futures are traded

The following are the participants of Derivatives Markets except:

contracts that are managed and regulated by the market

private agreements between investors but not traded on exchanges

buyer the right to buy/sell assets at a specific date & rate

give rights to holders to buy/sell assets at agreed price & date

the same as futures, however they are traded in OTC

allow parties to swap or exchange their financial obligations

a system that allows the exchange of funds between financial market participants such as

lenders, investors, and borrowers

operate at national and global levels

it gives rise to a financial asset on one hand and a financial liability or equity instrument on the other

Holders of Financial Assets are:

Makers of Financial Liabilities and Equity Instruments are:

companies sell stocks to the public for the first time

done through a process known as Initial Public Offering (IPO)

investors and traders buy and sell stocks to each other

company does not participate in these transactions

short-term debt instrument

long-term financial securities

typically a telephone and computer market rather than a physical building

deals with raising capital by means of shares, bonds, and other medium & long term investments

borrowers borrow funds directly from the financial market

borrowers borrow funds from financial market through indirect means, such as through a financial intermediary.

an important aspect of the firm’s operations because it provides road maps for guiding, coordinating, and controlling the firm’s actions to achieve its objectives

targets that every person desires to achieve in the future

objectives that you need to achieve in order to meet the long-term goal

very important for it contains the funds required, when will it become available, how much is needed, how much is needed, how much is to add, and how will these funds be used

provides flexibility in objectives, policies, and procedures to adjust according to the changing economic situations.

also known as the budget

is the process of transforming the planned courses of action into quantitative terms — in the form of

money

Objectives of Financial Plan except:

is the process of ensuring that customers pay their dues on time.

— helps the businesses to prevent themselves from running out of working capital at any point of time. — prevents overdue payment or non-payment of the pending amounts of the customers.

— builds the businesses financial and liquidity position.

one of the tools used to identify the credibility of the accounts receivable is to use credit management in which its purpose is to identify the quality of accounts receivable collection

used in which it enables us to identify the paying ability of the customers which shall be reviewed before agreeing to any terms and conditions

integral part of the credit evaluation and there are 5C’s used in credit evaluation

5C’s

also a control measure to determine the amount of receivables that are still outstanding and past due

current economic or business conditions

a customer’s financial resources

security pledged for payment of the loan

a customer’s ability to generate cash flows

willingness of the borrower to repay the loan

involves the formulation and administration of plans and policies to efficiently and satisfactorily meet production and merchandising requirements and minimize costs relative to inventories

In a manufacturing company, there are three types of inventory:

these are purchased materials not yet put into production

these are goods and labor put into production but not yet finished

these are goods put into production and finished. These are ready to be sold

One way to control inventory is to classify inventory into a classification system

also referred to as a universal or commercial bank can range from a large financial institution with a highly visible brand name and an international presence to a small organization with a local presence.

otherwise known as banking institutions, are corporations that provide services as intermediaries of financial markets

accept and manage deposits and make loans, including banks, building societies, credit unions, trust companies, and mortgage loan companies

insurance companies and pension funds

investment banks, underwriters, brokerage firms

is a financial institution that does not have a full banking license and cannot accept deposits from the public

Insurance companies underwrite economic risks associated with death, illness, damage to or loss of property, and other risks of loss. They provide a contingent promise of economic protection in the case of loss.

also called institutional investors) provide the opportunity for individuals to invest in collective investment vehicles in a fiduciary rather than a principal role

Market makers are broker-dealer institutions that quote both a buy and sell price for an asset held in inventory.

As the banking system was evolving there was a parallel development of the other financial institutions. Insurance for workers under the Government Service Insurance System was in operation by 1936. Compulsory social security insurance in the private sector was founded in 1957 with the creation of the Social Security System.

These are stock corporations engaged in the underwriting of securities of other corporations on a guaranteed basis. Their principal role is capital formation that can engage in portfolio management, stock brokerage, financial consultancy and lending operations. As it applies to the US financial system, the investment banking industry is part of the larger securities sector. It is basically made up of firms engaged in issuing, distributing and selling securities and related financial products. Investment banks, brokerages and market- making entities comprise the securities sector. Investment banks are global financial institutions which perform any or all of the service functions of origination and issue, management, underwriting and distribution.

Organized for the purpose of extending credit facilities to consumers and to industrial, commercial, or agricultural enterprises. They operate by discounting or factoring commercial papers or accounts receivables, or by buying and selling contracts, leases, chattel mortgages, or other evidences of indebtedness, or by leasing motor vehicles, heavy equipment and industrial machinery, business and office machines and equipment, appliances, and other movable properties.

Any issuer which the Commission, upon application by such issuer, finds and by order declares to be primarily engaged in a business or businesses other than that of investing, reinvesting, or trading in securities either directly or (A) through majority-owned subsidiaries or (B) through controlled companies conducting types of business.

buys and sells shares of stock of another or acquires securities for profit. In contrast, a securities broker facilitates transaction between a buyer and seller of securities for a commission

These are organized jointly by private banks, the National Development Corporation and the Technology Livelihood Research Center and/or other government agencies to develop, promote, and assist small and medium scale enterprises through debt to equity financing.

Provide credit to small borrowers who are not qualified to obtain small loans from other financial institutions. Cost of borrowing and terms of payment are generally fair, making it one of the components of the country’s financial system that plays a vital role in socio-economic development. Compared with banks, pawn shops do not impose as many documentary requirements before releasing cash to customers. Moreover, the latter are more accessible, as they may be found even in remote areas where banks do not operate.

who make a practice of lending money for themselves or others. They extend all types of loans, generally short term, often without collateral, using their own capital

These are corporations whose capital stock must be subscribed by the stockholders in regular equal installments with the purpose of accumulating the stockholders’ savings and repaying them with their accumulated savings and profits upon surrender of their shares in order to encourage industry, savings, and home building among its stockholders.

most will want to know how you plan to spend it.

— some businesses experience resistance from banks when they apply for a loan to reduce existing debt

banks will consider how much experience you have

you might be asked to submit your business plan.

— your business plan can help the bank determine the right loan amount and term for you.

a bank will conduct a credit check.

— to determine your personal and business credit scores

— even though you’ll be borrowing money for your business, some personal information could affect your ability to qualify.

— your personal credit score will affect your eligibility.

amount of statements will vary depending on the bank you’re applying to.

— most banks will require a balance sheet, profit and loss statements, cash flow statements, income statements, and other financial projections

business or personal property that you put up to guarantee the repayment of a loan

primary financial concern for banks when it comes to accepting applicants involves business cash flow — in other words, does your business generate enough cash flow to repay a bank loan on-time?

— the bank will ask you to present information about your primary business cash sources.