Premium Essay

Business Finance

In: Business and Management

Submitted By felyn96
Words 1045
Pages 5
NATURE AND AIMS OF BUSINESS To better understand and appreciate the study of business finance.
The Philippine Economy Today Ours is a growing economy. Visible and increasing signs of healthy economic progress are now transforming the face of the country. A growing number of firms, mills, factories, plants.-business enterprises that represent the different aspects of economic activities- dot the many parts and regions of the country thereby changing sleepy towns and communities into progressive ones.
Impact of Business Someone has aptly remarked that, "business enterprise is people". This observation is not only correct but very striking indeed for business directly affects, or even rules, the everyday life of the people. In developing countries, like the Philippines, the standard of living rises only as more and more people learn and are able to engage in various aspects of economic activities. Thus, the growth and development of business enterprise in any country is the product of the people's drive, their bold experimentation and continuous adoption to changing conditions and environment brought about by technological improvements in industry and other human pursuits.
Role of Business Under the free enterprise system, the growth of the economy lies in the ability of private individuals to achieve economic objectives. The quest for profit is usually undertaken by engagement in business activities. Business is largely responsible for bringing into the market a wide array of products and services which were not previously available. Ex: latest cellphone models, video equipment, portable computers, etc. Profit-making has been adapted as a measure to motivate enterprising persons to engage in business.
What is Business? The dictionary defines business as referring to a pursuit, an occupation or enterprise in trade. The amount of capital investment,…...

Similar Documents

Premium Essay

Business Finance

...Running Header: Business Financing and the Capital Structure 1 Business Financing and Capital Structure Clifton Williams Strayer University Professor Henderson Fin 100 May 24, 2014 Business have to make many financial decision that a direct impact on operations and the ability to successfully compete in the marketplace. I will assume that I am a financial advisor to a business. I will give advice that I would give to the client for raising business capital using both debt and equity options in today’s economy. I will give advantages and disadvantages of each option. I will summarize the advice that I will give the client on selecting an investment banker to assist the business in raising capital. I will discuss the historical relationships between risk and return for common stock versus corporate bonds. I will explain the manner in which diversification helps in risk reduction in portfolio. I will support my response with actual data and concept learn from class. As financial advisor to a business I will give my client advice on raising business capital using debt and equity capital with their advantages and disadvantages. As my clients advisor I would describe the two most common types of financing which are debt and equity capital. I would tell them the difference between the two and the advantage and disadvantage of the two. Debt capital is an agreement contract between lenders and companies trying to start or grow its organizations.......

Words: 1104 - Pages: 5

Premium Essay

Business Finance

...Investigating Finance Control | | | By: Harmol Sehmi 11H1 | | Contents Page 1. Front Page 2. Contents page 3. Introduction 4. Business Costs 5. Carrying on Business costs 6. Carrying on Business Costs 7. Cash flow forecasts 8. Financial documents 9. Carrying on financial documents 10. Carrying on financial documents 11. Managing business finances 12. Managing business finances Introduction In this assignment I will summarise the difference between start-up and running costs, which will include a table showing these. Along with, summarising the difference between fixed and variable costs which will also including a table showing these. I will then write a summary explaining the importance of the following: * Sales revenue * Calculating total revenue (unit sales price x number of units sold) * Gross and net profit * Maximising profits (increasing revenue and/or decreasing costs) Later I will then calculate the profit or loss for the first year, using the data in Project 3 and advise him as to how he can make his Business more profitable. Secondly, I will create a PowerPoint presentation showing the usefulness of break-even analysis. I will start by writing a detailed description of what is break even analysis and explain the reasons why break even analysis is important to a business. I will then construct a Break Even chart using the data given for Julian & Johns’ business. I will......

Words: 3640 - Pages: 15

Premium Essay

Business Finance

... Copyright : All rights reserved. No part of this course may be reproduced in any form by any means without prior permission in writing from: 0    BUSINESS FINANCE OUbs002223 January 2014 OUbs002223 Business Finance Table of Contents      Unit 1 Agency Issue between shareholders and managers Unit 2 Investment appraisal methods Unit 3 Risks and Return Unit 4 Asset Pricing Models, CAPM & APT Unit 5 Capital Market Efficiency and Stock Market Anomalies Unit 6 Cost of Capital, Shareholder’s wealth, Gearing & Leasing Unit 7 The dividend decision Unit 8 Corporate Restructuring 1    Aim of the Module  To provide learners with knowledge of the principles and practice of the financing decisions of enterprises. Learners will learn about the decisions which firms make about financing their investments in productive capital. Teaching and learning strategy  The teaching and learning strategy is designed to develop in students an ability to understand the mechanisms of financial markets and the issues pertaining to investment decision in those markets. Students should be able to understand and apply the time value concepts with regards to investment decision. They should also be able to evaluate the risks and returns of financial......

Words: 8084 - Pages: 33

Premium Essay

Business Finance

...decisions are of vital importance to all, since they determine the potential to succeed. The decision whether or not to invest in a particular business would be based on a careful consideration of some key financial indicators of that particular business. Aqua America (formerly Philadelphia Suburban Corp.) is the largest U.S.-based publicly traded water utility, providing water and waste services in 10 states: Pennsylvania, Ohio, Illinois, Texas, New Jersey, Indiana, North Carolina, Virginia, Florida and Georgia (unregulated). The first factor considered is ‘Volume’; volume here refers to the number of stocks bought and sold in a single day of trading. The average volume of stock traded has to be over 500000; if lower, then liquidity is low. Technical analysts strongly believe that “It takes volume to make price move” (Kapoff, 1987). The average daily volume of this organization was estimated to be 771119 which is above the 500000 mark, this indicates that the company’s stock is quite liquid which make investment worthwhile. The second factor considered is ‘Beta’ (volatility); according to the CAPM of William Sharpe (1964) and John Lintner (1965), ‘a stock’s risk is summarized by its beta.’ Investments with a high beta are always very risky while otherwise for investments with a low beta. It usually make more sense to invest in business with a low risk level in as much as the higher the risk the higher the return, it makes more sense to play safe while investing which is......

Words: 644 - Pages: 3

Premium Essay

Business Finance

...Recent advances in evolutionary psychology and the cognitive neurosciences may be able to reconcile the EMH with behavioural anomalies. There is an old joke, widely told among economists, about an economist strolling down the street with a companion. They come upon a $100 bill lying on the ground, and as the companion reaches down to pick it up, the economist says, ‘Don’t bother – if it were a genuine $100 bill, someone would have already picked it up’. This humorous example of economic logic gone awry is a fairly accurate rendition of the efficient markets hypothesis (EMH), one of the most hotly contested propositions in all the social sciences. It is disarmingly simple to state, has far-reaching consequences for academic theories and business practice, and yet is surprisingly resilient to empirical proof or refutation. Even after several decades of research and literally thousands of published studies, economists have not yet reached a consensus about whether markets – particularly financial markets – are, in fact, efficient. The origins of the EMH can be traced back to the work of two individuals in the 1960s: Eugene F. Fama and Paul A. Samuelson. Remarkably, they independently developed the same basic notion of market efficiency from two rather different research agendas. These differences would propel the them along two distinct trajectories leading to several other breakthroughs and milestones, all originating from their point of intersection, the EMH. 2 Like so......

Words: 11295 - Pages: 46

Premium Essay

Business Finance

...BUSINESS FINANCE FAO: DIRECTORS, NATURALLY FRESH PLC CONTENTS Page(s) 1. Introduction 3 2. Required Rate of Return on Equity 3 3. Beta 3 4. Capital Asset Pricing Model 4 5.1 Limitations of CAPM 4 5.2 The APT Model 4 5.3 The Three-Factor Model 4 5.4 Required Rate of Return using APT or Three-Factor 5 Model 5. Bonds 5 6.5 How bond prices are determined 5 6.6 The Rate of Return on the bonds 6 6. Conclusion 7. Appendices 6.1 Appendix 1 – after tax rate of return on bonds 7 6.2 Appendix 2 – Excel Working and screen shot 8. References 9. Bibliography 1. Introduction Naturally Fresh Plc are considering converting a number of their farms in Southern Europe into campsites following difficult trading conditions. This report will look at the required rate of returns on the equity as well as the bonds, whilst explaining the models used to calculate the returns and also provide a recommendation on whether the investment opportunity should be accepted by Naturally Fresh Plc. 2. Required Rate of Return on Equity Key | | E(R) | Expected/Required Rate of Return | R(f) | Risk Free Rate | B | Beta | R(m) | Market Return | R(m)-R(f) | Market Premium | Capital Asset Pricing Model (CAPM): E(R) = Rf + B(Rm-Rf) E(R) = 2% + 0.8(12%-2%) E(R) = 10% The required rate of......

Words: 2713 - Pages: 11

Premium Essay

Business and Finance

...Business Strategy ST3S03A Module Workbook: 2015 CONTENTS 1. Module Introduction 2. Module Aims and Learning Outcomes 3. Teaching methods 4. Lecture/Tutorial Programme 5. Unit Descriptors 6. Reading 7. Assessment Please note that information contained in this document may be subject to amendment. This workbook is the copyright of Dan Taylor, Simon Brooks & Paul Davies. The material contained in it may only be used for teaching purposes in association with the Business School of the University of South Wales, and with the explicit permission of the authors. 1. Module Introduction – What is this module about? Welcome to the workbook for Business Strategy. This book contains all the background information you need for the whole course, together with the lecture and tutorial programme. Use this book as your key reference for information on the course. Most of the frequently asked questions you are likely to raise are answered here. Please note that while this information is correct at the time of going to press, we reserve the right to alter the programme and other course details from time to time. This will be done through announcements in lectures and on Blackboard, the web-based learning environment. It is imperative that students access Blackboard regularly to ensure they are aware of any changes. This course is intended to be an informative and interesting introduction to......

Words: 4077 - Pages: 17

Premium Essay

Business Finance

...School of Management, Operations and Marketing COMM331: Integrative Business Capstone Subject Outline 6 credit points Subject Information Autumn, 2016 Wollongong On Campus Lecture Information: Mondays, 08:00 - 08:00, All COMM331 lectures are online via Moodle Pre-requisites: 96 Credit Points including all Faculty of Business undergraduate 1st year core subjects Co-requisites: Nil Restrictions: COMM333 Contact Hours: Online lectures plus 1 hour of tutorial (up to week 6) and 2 hours of computer lab (from week 7 up to week 13) Online Subject Material: The lecture material for COMM331 is all online. Students can access online materials via Moodle. COMM331 is supported by a UOW Libguide available at http://uow.libguides.com/index Teaching Staff Teaching Role Name Coordinator, Lecturer and Dr Belinda Gibbons Tutor Telephone Email 42215824 bgibbons@uow.edu.au Room Consultation Times 40.247 Wednesday 10:30 - 12:30 Thursday 13:30 - 15:30 Head Tutor Ms Natalie Akmacic NA akmacic@uow.edu.au NA TBA Tutor Ms Jinqi Xu NA vivenx@uow.edu.au NA TBA Tutor Mr Viktor Tomeski NA viktor@uow.edu.au NA TBA Tutor Ms Lynda Lorkovic NA lbricevs@uow.edu.au NA TBA Tutor Ms Nadeera Ranabahu Mudiyanselage NA nadeera@uow.edu.au NA COMM331 Subject Outline Autumn, 2016 TBA Page 1 of 21 Email Etiquette: Consultation with your subject coordinator and/or teachers......

Words: 6498 - Pages: 26

Premium Essay

Business and Finance

...Systems, Management Control Process, Characteristics of a Good Management Control System, Distinction between Strategy Formulation, Management Control and Task Control – Types of Management Control Systems: Formal Control System, Informal Control System – Subsystems and Components of Management Control Systems: Formal Control Process, Informal Control Process Chapter 2: Approaches to Management Control Systems: Cybernetic Approach to Management Control Systems: Characteristics of a Cybernetic System, Cybernetic Paradigm and the Control Process, Designing Management Controls, Control Process Hierarchy – Contingency Approach to Management Control Systems: The Need for the Contingency Approach – Strategy and Control Systems: Corporate Strategy, Business Unit Strategy Chapter 3: Designing Management Control Systems: Steps in Designing Management Control Systems: Choice of Controls, Tightness of Controls – Factors Influencing the Design of Management Control Systems: Managerial Styles and the Design of Control Systems: Corporate Culture and Design of Control Systems, Decentralization and Design of Control Systems, Organizational Slack and Design of Control Systems, Stakeholder Controls and Design of Control Systems, Communication Structures and Control Process – Establishing a Customer-Focussed Total Quality Culture: Implementing Total Quality Management – Impact of Information Technology on Control Systems Design: Providing Information for Operational and Strategic Decision......

Words: 114680 - Pages: 459

Premium Essay

Small Business Finance

...Sources of Finance Loan from Family/Friends: Borrow money from another family member or friend, where length of loan, interest rate on loan and any other terms of the loan must be negotiated between parties. Advantages of a loan from family/friends is lower interest rates and more flexible repayment terms. Disadvantages of a loan from family/friends is lack of clarity with amount borrowed (the interest rate and the required payment terms) and also borrowing from friends and family can fracture relationships on a personal level Suitability Good Long or Short term finance option as terms of loan are decided between parties Interest rates are decided by parties Could be suitable source for Douglas Pty Ltd if family or friends have suitable amount of money for business and terms can be decided without affecting relationship. Bank Overdraft: Loan made by a bank in which the customer can withdraw more money from his or her bank account than has been deposited in the account. Advantages of bank overdraft is that it is a quick and flexible source of finance. They are easy and quick to arrange, with little fuss and It allows you to make essential payments when you need to borrow money. Disadvantages of bank overdraft are the costs as overdrafts carry interest (often at much higher than loans), Recall, the bank can recall the entire overdraft at any time. Security for overdrafts may need to be secured against your business assets, which put them at risk if you cannot meet......

Words: 1224 - Pages: 5

Premium Essay

Why Is Finance Important to a Business?

...Why is Finance so Important to a business? Finance is a crucial part of a start-up business; it is the cornerstone to determine whether or not your business will jump over the first hurdle. Without sufficient finance, a business has a very low risk of surviving the first stage of development. Finance can be important for various activities throughout the business starting with the purchasing of stock. If you are providing a product you will most likely need raw materials, if not then you will need general stock. Having more expensive, higher quality stock will push you to a competitive advantage. (Chron, 2013, Electronic Source.) Finance allows you to buy in order to sell and hopefully make a profit on those goods. If you are providing a service then finance will allow you to buy tools or equipment to improve your service. Start- up businesses might not necessarily have anyone other than the entrepreneur working, however if you have employees then finance will help pay their wages. In U.K. you pay business tax on your business profits, the amount of tax you pay depends on how much profit you generate. Finance is important to be able to pay these and calculate how much you owe to the government. Not having the sufficient finance will reduce the chances of the business accepting negotiations, therefore restricting the business in terms of growth (Chron, 2013, Electronic Source). Business finance is spent on two types of expenditure, capital and revenue. Capital expenditure is......

Words: 2159 - Pages: 9

Premium Essay

Plan Small Business Finances

...Plan Small Business Finances Assessment 1: Simulated Workplace Scenario: Introduction: For the case of this task, I will be simulating that I have invested my life savings to start a small business, that of a bakery. Having had previous skills in this industry, and already locating an ideal position with minimal competition, I will now undertake a number of financial projections for the business, with the end goal being to obtain finance to help with the start-up costs. The document will cover aspects as follows: Part A: • All costs, fixed and variable, relating to the start-up and general running of the business. • Prices of goods based off of costs and profit margin. • Break even sales points. • Pricing strategies related to market conditions. • Projected profit statement. Part B: • Set profit targets/goals. • Identify working capital requirements. • Identify asset requirements and asset management strategies. • Prepare cash flow projections. • Identify capital investment requirements. • Select budget targets and monitor financial performance. Part C: • Start-up and ongoing financial requirements • Sources of potential finance. • Cost of securing finance and strategies in order to obtain it. Part A: Research: The general running of the business will be done by myself and 2 full time employees, from a single location, operating 6 days a week, Monday through Saturday. The initial set up costs for the location, including 2 months of upfront rent and a...

Words: 1303 - Pages: 6

Premium Essay

International Business Finance

...Task Brief 2 – Written Assignment Module Title: | International Business Finance | Assessment Title: | Written Assignment | Individual/Group: | Individual | Weighting: | 70% | Submission Date: | week 24 | Instructions To Students For Submission Of This Coursework Task Details: This task takes the form of an essay and constitutes 70% of overall assessment for the module. You are required to choose ONE of the following two topics: (i) Discuss and evaluate the advantages and disadvantages of the methods used in order to hedge against the exchange rate risk? (iii) Why is it so difficult to predict future exchange rates? Critically evaluate the main methods available for predicting the future direction of exchange rates and assess their effectiveness in providing forecasts of use to international companies. Particular instructions to students: The assignment is to be no longer than 3000 words and should contain critical analysis, relevant empirical evidence and examples. Purpose of the module:This modules aims: • To provide an understanding of the theories and empirical evidence related to foreign exchange markets, and the implications of these for international firms. • To generate an understanding of the methods available to international companies to finance international trade investment and the risk associated with investment operations. • To review the alternative sources of funding available to a company.• To......

Words: 850 - Pages: 4

Free Essay

Fin/370 Finance for Business

...Individual Paper: Workshop 1 – Discussion Questions “DQ” University of Phoenix – FIN/370 Finance for Business Week 1 100%   Workshop 1 – Discussion Questions This paper will explore the discussion questions for the first of five workshops of Finance for Business. The three topics include: 1) The capital market, how the primary market differs from the secondary market, and in the student’s opinion are these markets efficient, and why. 2) The three primary roles of the U.S. Securities and Exchange Commission, how the Sarbanes-Oxley Act of 2002 augments the SEC’s role in managing financial governance, and if the writer thinks the passage of this act had the outcome of businesses becoming more ethical. Examples will be used to support this thinking.3) Ratios which measure a corporation’s liquidity, some problems associated with using these ratios, and how the DuPont analysis would overcome these problems. The DQ’s will be stated, and then the Discussion Answers will be explored below. DQ 1 – The Capital Market What is the capital market? How is the primary market different from the secondary market? In your opinion, are these markets efficient? Why? Discussion Answer 1 The capital market is “Any market in which securities are traded. Capital markets include the stock and bond markets.” (Farlex Financial Dictionary 2009) “Traditionally, this has referred to the market for trading long-term debt instruments (those that mature in more than one year). That is, the......

Words: 1810 - Pages: 8

Premium Essay

Fin 370/Finance for Business

...Initial Public Offerings Name: FIN 370/Finance for Business Date: Initial Public Offerings Private companies transform into public companies to expand and attract investors. To do this they begin selling common stock to institutional investors who then sell the stock to the general public through a securities exchange. According to Mayo, 2012, “If this sale is the first sale of common stock, it is referred to as an initial public offering (IPO).” In this essay, we will attempt to describe the initial public offering for the global firm, Facebook, Inc. We will describe the role of the investment banker and underwriter, the role of an originating house and a syndicate, explain the pricing of the issue, discuss some of the risks involved in the public offering and how the securities laws deal with them, and discuss any foreign exchange risks the company can face with ideas about how to mitigate them. The first thing Facebook needed to do to launch their IPO was to hire an investment banker and an underwriter. Facebook hired thirty-three investments banks who acted as brokers to bring together individuals with funds to invest in Facebook. The underwriters in those investment banks together with Facebook agreed on a certain amount to raise on the IPO. Their underwriters provided several services, but the main role is basically to take responsibility of selling those shares to investors. If they fail to sell the shares, they still owe the agreed amount to Facebook. The......

Words: 1351 - Pages: 6