1. Finance LAP 7 A B Describe the role of finance in a business organization. Discuss capital investment decisions and working capital management. Role of Finance Money Matters

2.  Finance: business function that involves all money and money management matters  Finance goals: Ensuring the business is profitable Reducing financial risk Finance in Business

3.  Closely interrelated and may overlap  Key differences: Finance—money management and investment decisions Accounting—recordkeeping activities Finance and Accounting Focus

4.  Key differences: Finance—boost growth, reduce risks Accounting—provide accurate and timely information Finance and Accounting Ultimate purpose

5.  Administration of assets (investment decisions)  Acquisition of funds (financing decisions) Finance Activities

6. Helps set goals for the future Plans and controls company spending Ensures sufficient financing Makes sure customers pay their bills Invests company money wisely Importance of Finance

7.  Controls spending for production and marketing  Needs information systems to communicate with other departments  Responsible for budgeting  Helps plan new projects and strategies Relationships With Other Business Activities

8.  Working capital management—short-term Current balance of assets and liabilities Accounts payable and receivable, inventory, and cash Capital Investment Decisions and Working Capital Management

9.  Which projects to invest in—capital budgeting  How to finance—capital Debt Equity Capital Investment Decisions

10.  Whether or not to pay dividends When? How much? Cash or stock? Capital Investment Decisions

11. What Is Accounting? The process of keeping financial recordsThe process of keeping financial records A basic business functionA basic business function A career choiceA career choice Something we use in our daily livesSomething we use in our daily lives

12. What Do Businesses Track with Accounting Information? The value of the things they ownThe value of the things they own Accounts owed to themAccounts owed to them Amounts that they owe to othersAmounts that they owe to others

13. Why Is Accounting Important to Businesses? Enables them to maintain control of their moneyEnables them to maintain control of their money Is used to make good financial decisionsIs used to make good financial decisions

14. How Does Accounting Maintain Financial Control? Tracking the business’s performance Planning for the future

15. Ride-go’s former CEO improperly spent investors’ money. Ride-go’s current CEO held a board meeting in the Bahamas.  Spent $350,000 on the “meeting”  Hired a tattoo artist, mermaids, and fire dancers What should Ride-go’s accountant do?  Approve payment for the trip?  Refuse to use company funds to pay for a party?

16.  Chris—financial manager Working on a budget Friend in marketing wants more money  What should he do?

17. Acknowledgments Original Developers: Kerry Winfrey and Lelia Ventling, MBA Research Version 2.0 Copyright © 2014 MBA Research and Curriculum Center Acknowledgments Original Developers: Kerry Winfrey and Lelia Ventling, MBA Research Version 2.0 Copyright © 2014 MBA Research and Curriculum Center

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