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Chapter 1.1 - Introduction

The document introduces finance as the study of how individuals and organizations acquire, manage, and make decisions about money and financial resources. It discusses the three basic functions of money, important concepts for making sound financial decisions, and reasons to study finance such as managing financial resources, making economic decisions, arriving at investment decisions, and understanding career paths for finance professionals. Examples of careers in finance are also provided across industries like commerce, government, and academia.

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Marxene Hazel Joy Morante
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9 views

Chapter 1.1 - Introduction

The document introduces finance as the study of how individuals and organizations acquire, manage, and make decisions about money and financial resources. It discusses the three basic functions of money, important concepts for making sound financial decisions, and reasons to study finance such as managing financial resources, making economic decisions, arriving at investment decisions, and understanding career paths for finance professionals. Examples of careers in finance are also provided across industries like commerce, government, and academia.

Uploaded by

Marxene Hazel Joy Morante
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Introduction to

Financial Management
What is Finance?
• Finance is the study of how the players in a
financial system acquire, spend, manage, and
make other sound financial decisions concerning
money and other financial resources.
• Money is anything generally accepted as a means
of paying for goods and services and for paying off
debts or liabilities.
Three Basic Functions of Money
1. As a medium of exchange
2. As a store of value
3. As a standard of value
Generally, sound financial decisions
contribute positively to individuals,
businesses, and the economy. As such
these should be made thoughtfully.
There are three important concepts in
making sound financial decision.
Three important concepts in making
sound financial decisions:
1. More value is preferred than less
2. The sooner cash is received, the more
valuable it is
3. Less risky assets are more valuable than
or preferred over riskier assets.
Reasons to study finance
1. To be able to manage money or financial
resources
Reasons to study finance
◦ Economics emphasizes that resources are scarce
therefore, they have to be managed properly to
maximize their use.
◦ Money or any financial resource is very often limited
and should not be exposed to risk.
◦ Many people who invest in a start-up business cannot
afford not to have a fail-safe just in case the business
does not work out as planned since it is the only
resource that they have.
Reasons to study finance
2. To be able to make sound economic
decisions
Reasons to study finance
◦ Decisions being made by individuals, businesses,
and governments affect the entire economy. Due to
this, they must be able to make decisions that
increase the value of their stakeholders. A lot is at
stake in every decision they make.
◦ Criteria and considerations must be set before
making financial decisions because they influence
policies that are being instituted in these entities.
Reasons to study finance
3. To be able to arrive at sound personal
and business investment decisions.
Reasons to study finance
◦ Individuals and businesses should make investment
decisions with much prudence. Prudence requires a
careful assessment of the situation, a consideration
of the available alternatives, and sensitivity analysis
highlighting pessimistic and optimistic scenarios.
◦ Moreover, a clear understanding of “what’s in it for
me” and for others results in an inclusive decision
that takes into consideration of all the stakeholders.
Reasons to study finance
4. To be able to understand the career path
available to finance professionals.
Reasons to study finance
◦ Knowing finance entails knowing as well the job
opportunities available to finance professionals.
From the various industries where they can start to
specific disciplines they can focus on.
Careers in Finance
• Commerce and industry
o Financial analyst
Evaluating financial performance and preparing financial
plans
o Cash Management Analyst
Monitoring daily cash inflows and outflows
o Capital Expenditures Analyst
Estimating cash flows and evaluating asset investment
opportunities
Careers in Finance
• Commerce and industry
o Credit Analyst - evaluating credit applications
o Loan Analyst – evaluating consumer and commercial loan
applications
o Bank teller – assisting consumers with their banking
transactions
o Investment researcher
o Insurance agent
o Real estate agent
Careers in Finance
• Commerce and industry
o Stockbroker
o Security analyst
• Government
o Administrative clerk
o Examiner
• Academe
o Lecturer
o Research assistant

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