Finance in Business

Organization
4 functional divisions

In a typical arrangement of a business organization

1. Production and operation divisions
2. General administrative or Human Resource Division
3. Marketing Division
4. Finance Division
Finance Officer

 Acts a financial traffic officer to almost all business transactions with monetary
considerations.
 “shock absorber” of budgetary request and requirements of other functional units
of business.
 Is responsible for managing the finances in the organization
Professional judgement – the product of his/ her varied experiences and strong
educational background in accounting, economics, and even operation science.
CFO’s decision-making classification
1. Operating Decisions
• Financial affecting the routine
operating activities of business.
• It is directed towards providing
immediate solution to the
concerns of the functional areas
of a firm such as manufacturing,
marketing, purchasing.
• Must exercise due prudence and
wise judgement in making
decisions
2. Investment Decisions 3. Financing Decisions
Deals with choosing small and large Deals with raising or acquiring of
with several investment opportunities. funds from outside sources and
Critically Evaluated on terms of ROI not from the ordinary results of
and expected cash flows business operation.
Variables: Activities or sources of raising
• Prime interest rate money:
• Discounted rate 1. Operations
Examples; 2. Investors or lenders
1. construction of building 3. owners
2. Research and development by
pharmaceutical companies
3. Intro of new product
4. Mergers
Qualifications of a Finance Officer

1. The Chief Finance Officer (CFO) must have the following:

2. Possesses sound knowledge of accounting and economic concepts and principles
3. Has profound understanding of operation science, statistics, and marketing
research
4. Has gained technical experience in finance and provided professional judgement
5. Has a good communication skills in both oral and written
6. Has impressive relationship with banks and other financial institutions
7. Has outstanding relationship within the business and among others functional
areas.
8. Is ethically and morally upright and socially responsible.
Knowledgeable in accounting and Economic
Principles
 Should be able to understand and/ or interpret financial statements, cash flow,
financial market and institution, interest rates and the effects of inflation on the
business.
 he/she must also have understanding of the monetary and fiscal policies of the
government that directly affect the operation of the business.
Familiar with operations of other
functional areas
 He/she is expected to provide technical support and services to the other
functional areas.
 Finance officer must have therefore be knowledgeable about operation science,
quantitative statistics
Technically equipped in finance with
professional judgement
 He must have varied technical experiences in analyzing market and economic
situations, banking and other financial institutions, practices
With good communications skills
With favorable relationships with financial
institutions
With harmonious relationships with other
units
Ethically and socially responsible

 Protecting the rights off the consumer and the business community in general
should be parallel with the goal of profit accumulation.

Pricing policy, allocation of funds on waste disposal system