SHS

Business Finance
Week 1- Module 1
Business Finance
Grade 12 Week 1 – Module 1
First Edition, 2020

Copyright © 2020
La Union Schools Division
Region I

All rights reserved. No part of this module may be reproduced in any form without
written permission from the copyright owners.

Development Team of the Module

Author: Geneisis P. Villanueva, T I

Editor: SDO La Union, Learning Resource Quality Assurance Team
Illustrator: Ernesto F. Ramos Jr., P II

Management Team:

ATTY. Donato D. Balderas, Jr.

Schools Division Superintendent
Vivian Luz S. Pagatpatan, Ph.D
Assistant Schools Division Superintendent
German E. Flora, Ph.D, CID Chief
Virgilio C. Boado, Ph.D, EPS in Charge of LRMS
Erlinda M. Dela Peña, Ed.D, EPS in Charge of Mathematics
Michael Jason D. Morales, PDO II
Claire P. Toluyen, Librarian II
Business Finance
Week 1- Module 1
 Target

Finance is a system that involves the exchange of funds between

borrowers and lenders and investors. In the finance system, credit, money, and
finance are used as a medium of various exchange. So, they work as a known value
for which the service and goods are exchanged.

Many fundamental concepts of finance come from macro and micro

economic theories such as time value of money which you have studied in your
previous lesson.

This module will provide you information and activities that will lead
you to understand Finance specifically Financial Management and the different
individuals involved.

After going through this module, you are expected to:

1. define finance
2. describe who are responsible for financial management within an
organization
3. explain the major role of financial management and the different individuals
involved (ABM_BF12-IIIa)

Before going on, check how much you know about this topic. Answer the
pretest on the next page in a separate sheet of paper.

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PRETEST

Direction: Read the questions carefully then encircle the correct answer.

1. It is a term for matters regarding the management, creation and study of

money.
A. Accounting B. Budgeting C. Finance D. Liquidation

2. It is the division of finance that deals with how corporations deal with
funding sources, capital structure and investment decisions.
A. Behavioural Finance C. Personal Finance
B. Corporate Finance D. Stock Finance

3. It is a finance category that covers managing your money as well as saving

and investing.
A. Behavioural Finance C. Personal Finance
B. Corporate Finance D. Stock Finance

4. Who are responsible for the financial management in an organization?

A. CEO B. Employees C. Financial Managers D. Sales Representative

5. Which of the following is a role of financial managers?

A. Ensures the financial health of an organization
B. Prepare the place where to start a business
C. Communicating with the investors
D. Monitor employees of the company

6. What type of financial manager directs the preparation of financial reports

that summarize and forecast the organizations financial position?
A. Credit Managers B. Controllers C. Creditors D. Collectors

7. What skill of financial manager is shown when they explain and justify
complex financial transactions?
A. Analytical Skills C. Communication Skills
B. attention to detail D. Math Skills

8. What skill of financial manager is shown in assisting executives in making

decisions that affect the organization.
A. Analytical Skills C. Communication Skills
B. Attention to detail D. Math Skills

9. What activity of a financial manager involves the projected revenues and

expenditures?
A. Financial Planning B. Investment C. Financing D. Reporting

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 [Link] financial activity is shown in funding projects and securities that
provide high returns?
A. Financial Planning B. Investment C. Financing D. Reporting

FINANCE AND FINANCIAL MANAGERS

For you to understand the lesson well, read and understand what you are
reading then do the following activities. Have fun and good luck!

Activity 1: Read Me! Understand ME!

Direction: Read the text about finance below. Understand what you are reading.

Have you ever tried to budget your money for a week or for a month? Have
you ever asked yourself how do companies and individuals acquire money needed
such as capital? All of this involved what we called finance.

FINANCE is a term for matters regarding the management, creation and study
of money and investments. Specifically, it deals with a term or broadly describing
the study and system of money, investments and other financial instruments.

Finance can be broadly divided into three categories, a.) public finance,
b.) corporate finance and c.) personal finance.

a. Public Finance includes tax systems, government expenditures,

budget procedures stabilization policy and instruments, debt issues
and other government concerns. Federal government helps prevent
market failure by overseeing the allocation of resources, distribution
of income and stabilization of money.
b. Corporate Finance involves managing assets, liabilities, revenues
and debt for a business. Business obtain financing through a
variety of means ranging from equity investments to credit
arrangements.
c. Personal Finance defines all financial decisions and activities of an
individual or households including budgeting, insurance, mortgage
planning, savings and retirement planning. Personal finance
depends largely on one’s earnings, living requirements, and
individual goal desire. As a specialized field, personal finance is a
recent development, through the forms it has been taught in

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 universities and school as “home economics” or “consumer
economics”.

Financial Managers perform data analysis and advise senior managers on

profit- maximizing ideas. The role of financial manager, particularly in business, is
changing in response to technology advances that have significantly reduce the
amount it takes to produce financial reports.

Direction: Read carefully and answer the following questions. Encircle the letter
your answer.

1. What do you call the study of money and investment?

A. Finance B. Accounting C. Budgeting D. Money Management
2. How many categories do finance have?
A.1 B.2 C.3 D. 4
3. What type of finance deals with tax systems and government expenditures?
A. Corporate Finance C. Personal Finance
B. Finance System D. Public Finance
4. What type of finance deals with financial decisions?
A. Corporate Finance C. Personal Finance
B. Finance System D. Public Finance
5. Which of the following terms deals with corporate finance?
A. Budgeting B. Insurance C. Revenues D. Stabilization Policy

THE BASICS OF FINANCE

Finance, as a distinct branch of theory and practice from economics, arose

in 1940’s and 1950’s with the work of Markowitz, Tobin, Sharpe, Treynor, Black
and Scholes to name just a few. Today “finance” is typically broken down into three
broad categories: a.) public finance includes tax systems, government expenditures,
budget procedures, stabilization policy and instruments, debt issues and other
government concerns. b.) Corporate finance involves managing assets, liabilities,
revenues, and debts for a business. c.) Personal finance defines all financial
decisions and activities of an individual or household including budgeting,
insurance mortgage planning savings and retirement planning.

THE FINANCIAL MANAGERS

The success of an operation of firms and markets can be achieved with the
help of the person involved in financing which is called financial managers.

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 Financial managers perform data analysis and advise senior managers on
profit- maximizing ideas. Financial managers are responsible for financial health of
an organization. They produce financial reports, direct investment activities and
develop strategies and plans for the long-term financial goal of their organization.
There are two types of Financial manager the controllers which direct the
preparation of financial reports and summarize and forecast the organizations
financial position such as income statement and credit managers who oversee the
firms credit business.

THE ROLE OF FINANCIAL MANAGERS

The role of financial manager, particularly in business, is changing in

response to technology advances that have significantly reduce the amount it takes
to produce financial reports. Financial managers typically perform different roles
in the company such as:
 Prepare financial statements, business activity reports and forecasts
 Monitor financial details to ensure that the legal requirements are met
 Supervise employees who do financial reporting and budgeting
 Review company financial report and seek ways to reduce cost
 Analyze market trends to find opportunities for expansion or acquiring other
companies.
 Help management make financial decision.

IMPORTANT SKILLS FOR FINANCIAL MANAGER

Analytical Skills- Financial mangers increasingly assist executives in making

decisions that affect the organization, a task for which they need analytical ability.
Communication Skills- Excellent communication are needed to explain and
justify complex financial transactions.
Attention Detail- in preparing and analyzing report such as balance sheet s
and income statements, financial manager must pay attention to detail.
Math Skills- Financial managers must be skilled in math including algebra.
An understanding of international finance and complex financial documents also is
important.
Organizational Skills Financial managers deal with a range of information
and documents they must stay organized to do their jobs respectively

OTHER FINANCIAL MANGERS

In Entrepreneurship the entrepreneurs are the CEO and in Business

Management we also have what we called Business managers. In a company we
also have our different managers.

1. BOARD OF DIRECTORS - They set policies on investment, capital structure and

dividends. They also approve company’s strategies, goals, and budget and appoint
and remove members of the top management including president. They determine
top management’s compensation.

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2. PRESIDENT – they are responsible for overseeing the operations of the company
and ensuring that the strategies as approved by the board are implemented as
planned. They perform all areas of management and represent the company in
professional, social, and civic activities

3. VP FOR SALES AND MARKETING – they are responsible for formulating

marketing strategies and plan, directing and coordinating company sales and
performing market and competitor analysis. They are also involved in analyzing
and evaluating effectiveness and cost of marketing methods applied, conducting or
directing research and promoting good relationship with customers and
distributors.

4. VP FOR PRODUCTION - Ensuring production meets demand and Identifying

production technology/process that minimizes production cost and makes the
company cost competitive is the main role of VP for production. They are also
responsible for Coming up with a production plan and identifying adequate and
competitively priced raw products.

5. VP FOR ADMINISTRATION- The main role of VP for Administration is coordinating

the functions of administration, finance, sales and marketing departments. VP for
Administration assist in other departments in hiring employees and provide
assistance in payroll preparation.

6. VP FOR FINANCE- VP for Finance has the four following main role Financing,
Investing, Operating and Dividend policies.

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 Explore

Here are some enrichment activities for you to work on to master and
strengthen the basic concepts you have learned from this lesson.

Enrichment Activity 1: CROSSWORD PUZZLE

DIRECTIONS: Fill in the cross word puzzle with the correct answers
identified in the statements below. Match the number of the question with
the given boxes placed across and down the grid. If answered correctly the
words will fit neatly into the puzzle.
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4 6

ACROSS DOWN
1. It is the study and system of money. 2. It is a type of finance that
3. Financial manger that direct preparation of defines all financial decisions and
financial reports activities of an individual.
5. Skills that need excellent communication 4. Financial managers who oversee
which are needed to explain and justify complex the firms credit business.
financial transaction 6. Financial managers deal with a
7. financial manager must understand range of information and
mathematical concepts and ideas including documents they must stay
algebra organized to do their jobs
respectively

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 Deepen

You have learned about finance and one type of finance is personal
finance which includes budgeting. At this point, make a personal or
household financial budget plan. Personal or household budget is a
summary that compares and tracks your income expenses for a defined
period.

What you need

Clean sheet of Pad Paper and a pen

What you have to do

To know how much you save, answer the activity. Suppose you have
PhP15,000 as a monthly income. Make a budget plan such that the
following items will be included in the budget.
1. food
2. transportation
3. electric bill
4. savings
5. clothing
You may include other items. Write your budget plan as simple as the
picture below.

MONTHLY BUDGET

EXPENSES

ITEM COST TOTAL COST

SAVINGS

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 Gauge

Directions: Read carefully each item. Use separate sheet for your answers.
Write only the letter of the best answer for each test item

1. Which of the following is not a role of VP for finance?

A. Financing C. Production
B. Investing D. Operating

2. Which of the following is a role of a president?

A. Ensuring production meets demand
B. Set policies on investment
C. Represent the company in civic activities
D. Formulating marketing strategies

3. Which of the following is the main role of the VP for Production?

A. Ensuring production meets demand
B. Set policies on investment
C. Represent the company in civic activities
D. Formulating marketing strategies

4. Who is the person involved in data analysis and profit- maximizing

ideas?
A. CEO C. Finance Manager
B. Department Heads D. Supervisors

5. What financial skill is shown in the statement “financial statement

must focus on details”?
A. Attention to detail C. Math skills
B. Communication Skills D. Organizational skills

6. What financial skill is shown in the statement “Excellent

communication are needed to explain”?
A. Attention to detail C. Math skills
B. Communication Skills D. Organizational skills

7. Which of the following is a responsibility of a financial manager?

A. Prepare financial statements
B. Monitor financial details
C. Help management make financial decision
D. All of the above

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8. What aspects affects the role of financial manager?
A. Consumers B. Market C. Technology D. All of the above

9. When does finance arose?

A. 1940’s B. 1980’s C. 1990’s D. 2000 onwards

10. What type of financial manger directs the preparation and

making of financial reports?
A. Controllers C. Production Manager
B. Credit Manager D. Sales Manager

Great job! You are almost done with this

module.

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References
Website:

Adam Hayes. June 7 2020. What is Finance? Retrieved July 24, 2020 from
[Link]

Roles of finance Mangers. Introduction to financial management. Retrieved

July 24, 2020 from [Link]
business/chapter/introduction-to-financial-management/

ANSWER KEY

Pre-test Jumpstart Explore Gauge

1. A 1. A 1. Finance 1. C
2. B 2. C 2. Personal 2. C
3. C 3. D 3. Controllers 3. A
4. C 4. C 4. Creditors 4. C
5. A 5. A 5. Communication 5. A
6. B 6. Organization 6. B
7. C 7. Math 7. D
8. A 8. D
9. D 9. A
10. A 10. A

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