Scribd Logo
Upload

Welcome to Scribd!

  • 364 views

    Chapter 1-Introduction To Financial Management

    Uploaded by

    fatinfy
    This chapter introduces financial management and its basic goals and functions. It discusses that financial management deals with managing a company's financing, investing, and operating activities. The key functions of a financial manager are to plan for and acquire funds, analyze and control resources, forecast financial needs and make important decisions regarding investments, financing, and cash flow. Financial managers aim to maximize profits in the short-term and maximize shareholder wealth over the long-term through raising share prices and market value. The chapter also provides an overview of Malaysia's financial markets and different forms of business organization like sole proprietorships, partnerships, and corporations.

    Copyright:

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

    Chapter 1-Introduction To Financial Management

    Uploaded by

    fatinfy
    364 views15 pages
    This chapter introduces financial management and its basic goals and functions. It discusses that financial management deals with managing a company's financing, investing, and operating activities. The key functions of a financial manager are to plan for and acquire funds, analyze and control resources, forecast financial needs and make important decisions regarding investments, financing, and cash flow. Financial managers aim to maximize profits in the short-term and maximize shareholder wealth over the long-term through raising share prices and market value. The chapter also provides an overview of Malaysia's financial markets and different forms of business organization like sole proprietorships, partnerships, and corporations.

    Original Description:

    Original Title

    Chapter 1-Introduction to Financial Management

    Copyright

    © © All Rights Reserved

    Available Formats

    PPTX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This chapter introduces financial management and its basic goals and functions. It discusses that financial management deals with managing a company's financing, investing, and operating activities. The key functions of a financial manager are to plan for and acquire funds, analyze and control resources, forecast financial needs and make important decisions regarding investments, financing, and cash flow. Financial managers aim to maximize profits in the short-term and maximize shareholder wealth over the long-term through raising share prices and market value. The chapter also provides an overview of Malaysia's financial markets and different forms of business organization like sole proprietorships, partnerships, and corporations.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    364 views15 pages

    Chapter 1-Introduction To Financial Management

    Uploaded by

    fatinfy
    This chapter introduces financial management and its basic goals and functions. It discusses that financial management deals with managing a company's financing, investing, and operating activities. The key functions of a financial manager are to plan for and acquire funds, analyze and control resources, forecast financial needs and make important decisions regarding investments, financing, and cash flow. Financial managers aim to maximize profits in the short-term and maximize shareholder wealth over the long-term through raising share prices and market value. The chapter also provides an overview of Malaysia's financial markets and different forms of business organization like sole proprietorships, partnerships, and corporations.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 15

    CHAPTER ONE:

    INTRODUCTION TO
    FINANCIAL MANAGEMENT
    Learning Objective
    Identify the basic goals, objective and
    functions of finance management.
    Understand the concept of financial
    environment and Malaysians Financial
    Market.

    Overview of Finance
    This

    chapter will enable nonfinance student to understand


    the basics of financial
    management and its importance
    to the business environment.
    Financial management deals with
    managing financing activities,
    investing activities and operating
    activities of a company.

    Overview of Finance
    What is Finance?
    Interrelated

    with Economic and

    Accounting
    Economic overview factors
    affecting the environment
    Accounting Balance sheet and
    Profit and loss account

    Overview of Finance

    Overview of Finance

    Why Study Finance?


    Manage

    our money
    Well provided for our future

    The Managerial Finance


    Function
    Financial

    management is a
    managerial activity concerned
    with planning and controlling
    of the firm's financial resources to
    generate returns on its invested
    funds.
    The managerial functions require
    greater planning, control and
    execution of financial
    activities.

    The Managerial Finance


    Function
    The Functions of a Financial Manager
    Plan for the acquisition and use of funds
    in relation to the firms objectives.
    1.

    Analyze and plan


    Assess the financial strength and weakness
    of the firm
    Make alternative courses of actions.
    Collect data for proper planning.

    The Managerial Finance


    Function
    2.

    Coordination and Control


    Interact with others to lay plans
    Control resources used

    3.

    Forecasting/anticipating
    Planning process
    Monitoring developments in the
    economy
    Keeping track of what happening in
    the financial market

    The Managerial Finance


    Function
    4.

    Making Financial Decisions


    Investment decisions (capital
    budgeting decision)
    Financing decisions (capital structure
    decision) E.g.: Equity funds, and
    Borrowed funds.
    Cash flow decisions (working capital
    decisions)

    Goal of the Financial


    Managers
    There are two well known of the criteria
    goal which are:
    Profit Maximization
    Short term targets that the firm needs
    to achieve in order to maximize
    shareholders wealth, example:

    1.

    Dividend
    Use up profit for future growth
    Can raise the share price of the firm

    Goal of the Financial


    Managers
    2.

    Wealth Maximization
    Maximizing the market value of the firm's
    ordinary share (common stock)
    Raise the market price at which the shares
    trade in the market place.

    The Financial
    Environment
    Financial Market
    An organization that is responsible
    for the distribution of funds to end
    users. E.g. :
    Banks
    Secondary market / money market

    Malaysians
    Financial Market

    Legal forms of Business Organization

    Forms of business organization can


    be either:
    1.

    Sole Proprietorship

    Business is registered to only one


    person.
    Unlimited liability
    Responsible for all activities and
    decision making
    Tax paid individually

    Legal forms of Business


    Organization
    2.

    Partnership

    More than one person enter the business wether


    Bound by a document called partnership
    agreement
    Tax paid individually
    3.

    Corporation

    Owner of a corporation will be its shareholders


    Decision making will be done by the board of
    directors / major shareholders
    The liability of the owners will be limited to the
    amount shares own
    Tax paid from dividend received

    QUESTIONS/EXERCISES
    1.

    2.

    3.

    4.

    Write in brief about Financial


    Management and discuss the scope
    and functions of Financial Management.
    Distinguish between Profit
    Maximisation and Wealth Maximisation
    objectives of the firm?
    What are the important decisions of
    finance functions? Explain their
    importance and relevance in Financial
    Management.
    What is an agency relationship?

    You might also like