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
2.2)finance of non-profit organization
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.
*Profit and Loss Statement
Is the statement produced periodically normally at the end of a financial year.
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.
2. Loans and Notes Payable
3. Advance from customers
4. Accrued expenses
5. Mortgage payable
6. Bonds payable
- shows the interest of the owners.
- represent the revenue realized...