Part 1: you cAn do it! AjA!!!
FINANCE - It is the science and art of managing money. FINANCIAL MANAGERS - They evaluate the accounting
PERSONAL - It is the level of finance that is concerned with statements, develop additional data, and make decisions based
individuals’ decisions. on their assessment of the associated returns and risks.
BUSINESS - It is the level of finance that is concerned with firms’ FINANCIAL INSTITUTIONS - These are intermediaries that
decisions. channel the savings of individuals, businesses, and
FINANCIAL SERVICES - It is the area of finance concerned governments into loans or investments.
with the design and delivery of advice and financial products. SHADOW BANKING SYSTEM - It describes a group of
CAREER OPPORTUNITIES - It includes banking, personal institutions that engage in lending activities, much like traditional
financial planning, investments, real estate, and insurance. banks, but these institutions do not accept deposits and are
MANAGERIAL FINANCE - It is concerned with the duties of the therefore not subject to the same regulations as traditional
financial manager working in a business. banks.
STAKEHOLDERS - Groups such as employees, customers, INVESTMENT BANKS - These are institutions that assist
suppliers, creditors, owners, and others who have a direct companies in raising capital, advise firms on major transactions
economic link to the firm. such as mergers or financial restructurings, and engage in
MARGINAL COST-BENEFIT ANALYSIS - It is the economic trading and market making activities.
principle that states that financial decisions should be made, and COMMERCIAL BANKS - These are institutions that provide
actions taken only when the added benefits exceed the added savers with a secure place to invest their funds and that offer
costs. loans to individual and business borrowers.
ACCOUNTANTS - They devote most of their attention to the CAPITAL GAIN - It is the amount by which the sale price of an
collection and presentation of financial data. asset exceeds the asset’s purchase price.
Part 2: Nothing but the TRUTH!!!
Creditors are interested in the short-term liquidity of the company and its ability to make interest and principal payments.
Balance Sheet is the summary of a firm’s financial position at a given point in time.
Benchmarking is a type of cross-sectional analysis in which the firm’s ratio values are compared to those of key competitors.
Investing activities generally involve long-term assets/fixed assets.
Ratio Analysis is a method of calculating and interpreting financial ratios to analyze and monitor the firm’s performance.
Part 3: pakaMemorize
2 types of Financial Markets (MC): Examples of key capital market securities (BCP):
Money Market Bonds
Capital Market Common Stocks
Preferred Stocks
3 Legal Forms of Business Organization (SPC):
Sole Proprietorship OR Sole Prop. The Four Key Financial Statements (CRIB):
Partnership OR Part. Cash Flow OR C/F
Corporation OR Corp. Retained Earnings OR R/E
Income Statement OR I/S
Firms that require funds from external sources can obtain Balance Sheet OR B/S
them in three ways through (FFP):
Financial Institutions Normal activities involved in a statement of Cash flows
Financial Markets (IFO):
Private Placements Investing
Financing
Operating
Two types of Ratio Analysis (CT):
Cross-Sectional
Time-Series
Part 4: PROBLEM SOLVING: Eto na mismo yun.
Balance Sheet
2YR BSA/AIS Enterprises
12/31/2023
Assets Liabilities
Cash 4,500.00 Accounts Payable 10,000.00
Accounts Receivable 1,000.00 Notes Payable 1,000.00
Inventory 1,000.00 Accruals 1,000.00
Total Current Assets 1,000.00 Total Current Liabilities 1,000.00
Total Non-Current Assets 1,000.00 Total Non-Current Liabilities 30,751.00
Total Liabilities 1,000.00
Stockholders' Equity 1,000.00
TOTAL LIABILITIES AND
TOTAL ASSETS 1,000.00 STOCKHOLDERS' EQUITY 1,000.00
Information (2023 values)
1. Sales totaled 110,000Php.
2. The gross profit margin was 25 percent.
3. Inventory turnover was 3.0.
4. There are 360 days in the year.
5. The average collection period was 65 days.
6. The current ratio was 2.40.
7. The total asset turnover was 1.13.
8. The debt ratio was 53.8 percent
Formula bank:
Accounts
Receivable Current Assets
Average Collection Period = Current Ratio =
Annual Sales /
360 days Current Liabilities
COGS Total Asset Turnover Sales
Inventory Turnover =
Inventory = Total Assets
Sales less COGS = Gross Profit Total Debt
Debt Ratio =
*COGS: Cost of Goods Sold Total Assets
