1

What is Finance?

ObjectiveTo Define Finance

The Value of FinanceIntroduction to

the Players

2

Important Terms

• Assets

• Personal investing & Asset allocation

• Liability, Debt

• Net Worth = Assets - Liabilities

• Exogenous and endogenous elements

3

The Roles of Corporate Financial Specialists

• Financial executive--a person with authority in the following functions:

V P O p era tion s

Treasu rer V P F in an c ia l P lan n in g C om p tro le r

C h ie f F in an c ia l O ffice r V P M arke tin g

C h ie f E xecu tive O ffice r

B oard o f D irec to rs

4

Financial Functions in a Corporation:• Planning

• Provision of Capital

• Administration of Funds

• Accounting and Control

• Protection of Assets

• Tax Administration

• Investor Relations

• Evaluation and Consulting

• Management Information Systems

5

Planning– long and short-term financial planning

– budgeting for capital expenditures

– budgeting for operations

– sales forecasting

– performance evaluation

– pricing policies

– economic appraisals

– analysis of acquisitions and divestments

6

Accounting and Control– establishment of accounting policies

– development & reporting of accounting data

– cost standards

– internal auditing

– systems and procedures (accounting)

– government reporting

– reporting & interpreting operations results

– comparing performance with operating plans and standards