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    Chapter 12 Managing The Finance Function

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    The document discusses managing the finance function. It describes the finance function as dealing with procuring and administering funds to achieve business objectives. The finance function determines fund requirements for daily operations, credit services, inventory purchases, and major assets. It also discusses sources of short-term and long-term funds, as well as risk management and insurance. Managing the finance function involves determining funding needs, obtaining funds, and effectively utilizing funds to meet business goals.

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    Chapter 12 Managing The Finance Function

    Uploaded by

    edward
    2K views16 pages
    The document discusses managing the finance function. It describes the finance function as dealing with procuring and administering funds to achieve business objectives. The finance function determines fund requirements for daily operations, credit services, inventory purchases, and major assets. It also discusses sources of short-term and long-term funds, as well as risk management and insurance. Managing the finance function involves determining funding needs, obtaining funds, and effectively utilizing funds to meet business goals.

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    The document discusses managing the finance function. It describes the finance function as dealing with procuring and administering funds to achieve business objectives. The finance function determines fund requirements for daily operations, credit services, inventory purchases, and major assets. It also discusses sources of short-term and long-term funds, as well as risk management and insurance. Managing the finance function involves determining funding needs, obtaining funds, and effectively utilizing funds to meet business goals.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    2K views16 pages

    Chapter 12 Managing The Finance Function

    Uploaded by

    edward
    The document discusses managing the finance function. It describes the finance function as dealing with procuring and administering funds to achieve business objectives. The finance function determines fund requirements for daily operations, credit services, inventory purchases, and major assets. It also discusses sources of short-term and long-term funds, as well as risk management and insurance. Managing the finance function involves determining funding needs, obtaining funds, and effectively utilizing funds to meet business goals.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 16

    CHAPTER 12:Managing the

    Finance Function

    Managing the Finance


    Function
    What Finance Function is ?

    - It is an important management responsibility that


    deals with the procurement and administration of funds
    with the view of achieving the objective business.. If the
    engineer manager is running the firm as a whole, he
    must be concerned with the determination of the
    amount of funds required, when they are needed, how to
    procure them, effective and efficient usage.
    - one of the three basic management function the other
    2 was production and marketing.

    Managing the Finance


    Function

    The Determination of Fund Requirements


    - funds for specific requirement/s
    1. to finance daily operations
    2. to finance the firms credit services
    3. to finance the purchase of inventory
    4. to finance the major assets

    Managing the Finance


    Function
    For Financing Daily operation

    - day to day operations of a given firm


    - for taking care of expenses as it comes
    Examples :
    Wages and salaries, rent, taxes, power light or some

    marketing expenses like advertising, travel,


    entertainment, printings etc. or some administrative
    expenses like auditing legal, services

    Managing the Finance


    Function
    For Financing Firms Credit Services
    - it is unavoidable for customers upon extending credit
    - if a firm finds difficulty in convincing distributors to carry

    their products

    Managing the Finance


    Function
    For Financing the Purchase of Inventory
    - to maintain adequate inventory or the raw materials,

    supplies and parts are needed to be kept in storage.


    - must have sufficient funding and must be secured

    Managing the Finance


    Function

    For Financing the Purchase of Major Assets


    - used when you a certain company needs expansion or

    if they want to make investment on capital assets like


    land, plant, equipments
    - must have long term sources

    Managing the Finance


    Function
    The Sources of Funds

    - if a firm will have to make use of its cash inflows came

    from various sources :


    1. Cash sales
    2. Collection of Accounts Recievables
    3. Loans and Credits
    4. Sales Of assets
    5. Ownership Contributions
    6. Advances from customers

    Managing the Finance


    Function
    Short term funds

    - are those repayment schedules with less than 1 year.

    Supplies of short term funds


    1. trade creditors
    2. commercial banks
    3. commercial paper houses
    4. finance companies
    5. factors and insurance companies

    Managing the Finance


    Function
    Long term sources of funds

    - it has to tap long sources funds (necessary)


    1. long term debts
    2. common stocks
    3. retained earnings

    Managing the Finance


    Function
    The best source of financing :

    As to Schall and Haley recommends, factors to be

    considered are :
    A. Flexibility
    B. Risk
    C. Income
    D. Control
    E. Timing
    F. collateral values, floatation costs, speed, exposure

    Managing the Finance


    Function

    Risk Management and Insurance


    - risk is a very important concept that everybody must

    be familiar with, risk refers to the uncertain loss or injury


    Examples :
    Fire
    Theft
    Flood
    Accidents

    Bad Debts
    disablity and death
    damage claim from other parties

    Managing the Finance


    Function
    Types of Risks

    Pure- means there is no way of making gains


    Ex. Theft
    Speculative- there is a chance of loss or gains
    Ex. Investments in common stocks

    Managing the Finance


    Function
    Risk Management
    - is an organized strategy for protecting and conserving assets and people
    - for us to know what to do upon risk occurances
    - to have a choice on methods of dealing on it

    Managing the Finance Function


    Methods of Dealing with risk
    1. The risk may be avoided
    2. the risk may be retained
    3. the hazard may be reduced
    4. the losses may be reduced
    5. the risk may be shifted

    Managing the Finance


    Function

    short term

    Determination
    o
    Of
    o
    Funds
    Requirements

    Procurement
    Of funds

    Long term
    (process Flow)

    effective
    And efficient use

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