Finance Hand-Outs.

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Fundamental Concepts and Tools of Business Finance

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Fundamental Concepts and Tools of Business Finance

Finance - study of the acquisition and investment of cash purpose of enhancing value and wealth.

Categories of finance:

1.) Public finance
2.) Private finance
2.1)personal finance
2.2)finance of non-profit organization
2.3)business finance

Three aspects of business Finance
* Small business finance
* Corporation finance
* Multinational business finance
Goals of Business Finance

* Maximizing profit - realizing the highest possible peso or dollar. * Maximizing profitability - when a firm decides on obtaining a higher rate of return on its investment. * Maximizing profit subject to cash constraint

* Maximizing net present worth - to maximize the current value of the company to its owners.

*Time value of money
*Calculation of present worth

* Seeking an optimum position along risk-return frontier - can set a goal of achieving the best possible combination of risk and return.

Financial Statement

*Profit and Loss Statement
*Balance Sheet
Is the statement produced periodically normally at the end of a financial year.

Assets
These assets section of the balance sheet shows everything that the firm own and which has monetary value.

1. Current Assets
2. Trade investment
3. Fixed assets
4. Intangible Assets

Liabilities - the profile debts of the company. It classified into several items and are presented first and referred to as current liabilities. Long-term liablities are those are payable after one year.

1. Accounts
2. Loans and Notes Payable
3. Advance from customers
4. Accrued expenses
5. Mortgage payable
6. Bonds payable

Net Worth
- shows the interest of the owners.

Income Statement
- represent the revenue realized...
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