College of Business Administration Education

2nd Floor, SS Building

Bolton Street, Davao City
Telefax: (082)227-5456 Local 131

UNIVERSITY OF MINDANAO
College of Business Administration Education
Financial Management Program

Physically Distanced but Academically Engaged

Self-Instructional Manual (SIM) for Self-Directed Learning (SDL)

Course/Subject: CBM 3 – Business Finance

Name of Teacher: Maria Julieta R. Torres

THIS SIM/SDL MANUAL IS A DRAFT VERSION ONLY; NOT FOR

REPRODUCTION AND DISTRIBUTION OUTSIDE OF ITS INTENDED
USE. THIS IS INTENDED ONLY FOR THE USE OF THE STUDENTS
WHO ARE OFFICIALLY ENROLLED IN THE COURSE/SUBJECT.
EXPECT REVISIONS OF THE MANUAL.

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 College of Business Administration Education
2nd Floor, SS Building
Bolton Street, Davao City
Telefax: (082)227-5456 Local 131

TABLE OF CONTENTS

Title Page Page

Cover Page 1
Table of Contents 2
Course Outline: CBME3 – Business Finance 3
Course Outline Policy 3
ULOa: Explain Managerial Finance, Finance and the General Areas 7
of Finance
Metalanguage 7
Essential Knowledge 8
I. Overview of Financial System 8
I.1 Managerial Finance 9
I.2 Finance 9
I.3 The Five (5) General Areas of Finance 9
ULOb: Discuss the importance of finance in non-finance areas 10
Essential Knowledge 10
I. Importance of finance in non-finance areas 10
ULOc: Deliberate alternative forms of business organizations,
manager’s role as agents of stockholders 11
Essential Knowledge 11
I. Forms of Business Organizations 11
II. Manager’s Role as Agents of Stockholders 13
III. The Manager’s Role Within The Organization 13
IV. The Work of The Manager 14
ULOd: Understand business ethics and corporate good governance 14
Essential Knowledge 14
I. Business Ethics 14
II. Good Corporate Governance 18
References 19
Activities 20

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 College of Business Administration Education
2nd Floor, SS Building
Bolton Street, Davao City
Telefax: (082)227-5456 Local 131

Course Outline: CBM 3 Business Finance

Professor: Maria Julieta R. Torres. CPA, MBA,

Email: mariatorres@umindanao.edu.ph
Student Consultation: By online (LMS), group chat
Mobile: 0920962-5368 (CALLs only)
Phone: (082) 2275456 local 131
Effectivity Date: June 2020
Mode of Delivery: Blended (On-Line with face to face or virtual sessions)
Time Frame: 54 Hours
Student Workload: Self-Directed Expected Learning
Requisites: None
Credit: 3
Attendance Requirements: A minimum of 95% attendance is required at all
scheduled Virtual or face to face sessions.

Course Outline Policy

Areas of Concern Details

Contact and Non-contact Hours This 3-unit course self-instructional manual is
designed for blended learning mode of instructional
delivery with scheduled face to face or virtual
sessions. The expected number of hours will be 54
of face-to-face or virtual sessions.
Assessment Task Submission Submission of assessment tasks shall be on the 3rd,
5th, 7th, and 9th weeks of the term. The assessment
paper shall be attached with a cover page indicating
the title of the assessment task (if the task is a
performance), the professor's name, date of
submission, and the name of the student. The
document should be emailed to the professor. It is
also expected that you already paid your tuition and
other fees before the submission of the assessment
task.
If the assessment task is done in real-time through
the Blackboard Learning Management System's
features, the schedule shall be arranged ahead of
time by the professor.

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 College of Business Administration Education
2nd Floor, SS Building
Bolton Street, Davao City
Telefax: (082)227-5456 Local 131

Turnitin In order to ensure honesty and authenticity, all

submission assessment tasks are required to be submitted
(if necessary) through Turnitin with a maximum similarity index of
30% allowed. If your paper goes beyond 30%,
students will either opt to redo her/his paper or
explain in writing addressed to the course coordinator
the reasons for the similarity. Besides, if the
document has reached a more than 30% similarity
index, it may be called for disciplinary action per the
University's OPM on Intellectual and Academic
Honesty.

Please note that academic dishonesty such as

cheating and commissioning other students or people
to complete the task for you have severe punishments
(reprimand, warning, expulsion).
Penalties for Late An assessment item submitted after the designated
Assignments/Assessme time on the due date, without an approved extension
nts of time, will be decreased by 5% of the possible
maximum score for that assessment item for each
day or part-day that the assessment item is late.

However, if the late submission of the assessment

paper has a valid reason, a letter of explanation
should be submitted and approved by the course
coordinator. If necessary, you will also be required
to present/attach
evidence.
Return of Assessment tasks will be returned to you two (2)
Assignments/ weeks after the submission and returned by email or
Assessments via the Blackboard portal.

For group assessment tasks, the professor will

require some or a few students for online or virtual
sessions to ask clarificatory questions to validate the
originality of the assessment task submitted and to
ensure that all the group members are involved.
Assignment Resubmission You should request in writing addressed to the
professor his/her intention to resubmit an assessment
task. The resubmission is premised on the student’s
failure to comply with the similarity index and other
reasonable grounds such as academic literacy
standards or other reasonable circumstances, e.g.,
illness, accident financial constraints.

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 College of Business Administration Education
2nd Floor, SS Building
Bolton Street, Davao City
Telefax: (082)227-5456 Local 131

Re-marking of You should request in writing addressed to the

Assessment Papers professor your intention to appeal or contest the score
and Appeal given to an assessment task. The letter should
explicitly explain the reasons/points to contest the
grade. The program coordinator shall communicate
with the students on the approval and disapproval of
the request.

If the professor disapproves, you can elevate your

case to the program head or the dean with the original
letter of request. The final decision will be from the
dean of the college.
Grading System All culled from BlackBoard sessions and
traditional contact
Course discussions/exercises – 30%
1st formative assessment – 10%
2nd formative assessment –10 %
3rd formative assessment –10%

All culled from on-campus/onsite sessions (TBA):

Final exam – 40%

Submission of the final grades shall follow the

usual University system and procedures.
Preferred Referencing Style Harvard Style Referencing

Student Communication You are required to create a umindanao email

account, which is required to access the BlackBoard
portal. Then, the professor will enroll the students to
access the materials and resources of the course. All
communication formats: chat, submission of
assessment tasks, requests, etc. shall be through the
portal and other university recognized platforms.

You can also meet the professor in person through

the scheduled face to face sessions to raise your
issues and concerns.

For students who have not created their student

email, please contact the professor or program head.

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 College of Business Administration Education
2nd Floor, SS Building
Bolton Street, Davao City
Telefax: (082)227-5456 Local 131

Contact Details of the Dean Vicente Salvador E. Montaño, DBA

Email:vicente_montano@umindanao.edu.ph
Phone: 09094177626 (CALLS only)
Contact Details of the Assistant Jestita F. Gurrea, DBM
Dean Email: jgurrea@umindanao.edu.ph
Phone: 09461390333 (CALLS only)
Contact Details of the Rowena C. Cinco, MBA, CMITAP
Program Head Email: BSBAFinMan@umindanao.edu.ph
Phone: 09454229329 (CALLs only)
Students with Special Needs Students with special needs shall communicate with the
course coordinator about the nature of his or her
respective needs. As to the nature of the need, the course
coordinator, with the program coordinator's approval, may
offer alternative assessment tasks or extension of the
deadline for submission of assessment tasks. However,
alternative assessment tasks should still help achieve the
desired course learning outcomes.
Instructional Help Desk Reil Romero
Email: BSEntrep@umindanao.edu.ph
Phone: 09090618789 (CALLs only)
Library Help Desk Brigida E. Bacani, Head, LIC
library@umindanao.edu.ph
Hotline no.: 09513766681
Well-being Welfare Support Help Rhoda Neileen P. Luayon
Desk Email: gstcmain@umindanao.edu.ph
Phone: 09190011887

Course Information – see/download course syllabus in the BlackBoard LMS.

CC’s Voice: Hello, welcome to this course CBM 3 – Business Finance. You are
enrolled in this course because you want to acquire additional
knowledge about Business Finance which can help you when you
finish your course which I am confident that you will be able to make
your career decision to become an entrepreneur or a manager in the
Tourism and Hospitality industry.

CO Mainly, before becoming a successful entrepreneur or manager, you

have to have an adequate knowledge or even above par knowledge
a business person or manager should possess, which is the ultimate
course outcome (CO) of this subject. When we discussed business
finance, assessing learning outcomes, competencies, and
performance of managers is intimately attached. Thus, in this you
are expected to demonstrate knowledge in business finance which
includes among others an overview of the financial system,
managerial finance, the general areas of finance and the importance
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 College of Business Administration Education
2nd Floor, SS Building
Bolton Street, Davao City
Telefax: (082)227-5456 Local 131

of finance in non-finance areas, alternative forms of business

organizations, manager’s role as agents of stockholders and
business ethics and corporate good governance.

Let’s get started!

Big Picture in Focus

Week 1-3: Unit Learning Outcomes (ULO): At the end of the unit, you are expected
to:
a. Explain Managerial Finance, Finance and the General Areas of
Finance;
b. Discuss the importance of finance in non-finance areas;
c. Deliberate alternative forms of business organizations, manager’s role as
agents of stockholders and
d. Understand business ethics and corporate good governance.

Big Picture in Focus: ULOa: Explain Managerial Finance,

Finance and the General Areas of Finance

Metalanguage

In this section, the essential terms relevant to the study of Managerial Finance to
demonstrate ULO (Unit Learning Outcome) will be operationally defined to establish a
standard frame of reference as to how the texts work in your chosen field or career. You
will encounter these terms as we go through the study of business finance.

To perform the aforesaid big picture (unit learning outcomes) for three (3) weeks
of the course, you need to fully understand the following essential knowledge that will be
laid down in the succeeding pages. Please take note that you are not limited to refer to
these resources exclusively. Thus, you are expected to utilize other books, research
articles, and other resources available in the university's library, e.g., ebrary,
search.proquest.com, etc.

For you to demonstrate ULOa, you will need to have an operational understanding
of the following terms below. You will encounter these terms as we go through the study
of business finance.

1. Finance. It refers to the basis of funding for a specific financial transaction.

2. Business Finance. It refers to the use of money and credit in business,
3. Managerial Finance. It deals with decisions that all business firms formulate
concerning cash flows, including both inflows and outflows.

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 College of Business Administration Education
2nd Floor, SS Building
Bolton Street, Davao City
Telefax: (082)227-5456 Local 131

4. Management. It involves employee relations and personnel decisions, strategic

planning, and the overall operations of the business.
5. Financial Management. It is the management of money and other valuables that
can easily be converted into cash.
6. Financial Services. It refers to functions provided by organizations that deal with
the management of money.
7. Financial Institution. It is an entity involved in the business of engaging with
financial and monetary transactions such as deposits, loans, investments, and
currency exchange.
8. Financial Markets. It is a trading floor wherein trading of financial securities, which
include stocks and bonds, and precious metals and derivatives occur at low
transaction costs.
9. Investment. It refers to the process of financing funds for profit or monetary gains.
10. Ethics. It deals with standards and values, with questions of what is right and what
is good, what one should to do and not to do, and what is a worthy person or life.
11. Business Ethics. It is the study of proper business policies and practices regarding
theoretically controversial subjects including corporate governance, insider trading,
bribery, discrimination, corporate social responsibility, and fiduciary responsibilities.
12. Corporate Governance. It is the full disclosure of data and an account of an
organization’s financial condition, performance, ownership and authority, relationship
with shareholders and commitment to business ethics and morals.

Essential Knowledge

I. Overview of the Financial System

A country’s financial system comprises of financial intermediation, financial

markets, and financial instruments or products. You will have detailed knowledge of the
financial system in the succeeding lessons.

The Structure of a Financial System

THE FINANCIAL
SYSTEM

FINANCIAL FINANCIAL FINANCIAL

INSTRUMENTS
FINANCIAL
SERVICE
INSTITUTIONS MARKETS
CLAIMS

NON Inter- Non-inter ASSETS

BANKING PRIMARY SECONDARY SECURITIES

BANKING mediaries mediaries
CAPITAL MONEY
MARKET
MARKET

EQUITY DEBT DERIVATIVE

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 College of Business Administration Education
2nd Floor, SS Building
Bolton Street, Davao City
Telefax: (082)227-5456 Local 131

I.1 Managerial Finance

Managerial finance is commonly known as corporate finance. It deals with the financing
decisions made in any organization on a profitable basis.

➢ How is managerial finance different from accounting?

Accounting provides an important function in that all use of resources are clearly
accounted for as per generally accepted standards. More often the financial reports that
are produced as part of accounting are historical in nature.

Finance on the other hand depends to a great extent on the markets for all financial
decisions.

Therefore finance is completely different from accounting nevertheless we are

dependent on financial statements for important financial decisions.

I.2 Finance

Finance can be identified as the same as money. However, it is so since it is the

basis of delivering resources for a company's specific action.

Finance can also be defined as assessing the requirements of funds, classifying

resources and disposition, and measuring the effects of investment with an
understanding of improving outcomes in the future.

I.3 The Five (5) General Areas of Finance

There are five (5) general areas of finance, namely:

1. Financial Managerial
2. Financial Services
3. Financial Institution
4. Financial Market
5. Investment Banking

1. Managerial Finance or Managerial Finance or Financial Management deals

with decisions that all business firms formulate concerning cash flows,
including both inflows and outflows.
2. Financial Services refers to functions provided by organizations that deal with
the management of money.
3. Financial Institutions are entities involved in the business of engaging with
financial and monetary transactions such as deposits, loans, investments, and
currency exchange.

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 College of Business Administration Education
2nd Floor, SS Building
Bolton Street, Davao City
Telefax: (082)227-5456 Local 131

4. Financial Market is a trading floor wherein trading of financial securities, which

include stocks and bonds, and precious metals and derivatives occur at low
transaction costs.
5. Investment Banking is a special division of banks related to the creation of
capital for other companies, governments, and other businesses.

Financial Institutions, Financial Markets, and Investments will be discussed

in detail in the succeeding lessons.

Big Picture in Focus: ULOb: Discuss the importance of

finance in non-finance areas

Essential Knowledge

I. Importance of finance in non-finance areas

When we discuss on finance, it generally is related with the study of funds or

money. In layperson’s term, it is denoted as the science of money management. We
always encounter this in our day-to-day life whether it be for personal reason or
business decision making resolution. Therefore, finance is an essential feature which
every person must be aware of if one expects for some significant impact to success of
one’s organization.

It should be noted that It is not just that finance is relevant for accounts specialists
or certified public accountants who deal with spreadsheets data of the business.

In fact, there are great chances that as a non-finance professional, one has to
analyze spreadsheets, working papers, facts and figures at some point of time to
organize and prepare objectives in accordance to the presented information.

And so, why is financial knowledge important for non-finance entrepreneurs,

business persons or managers other than financial managers?

Professionals who possess with a financial background are greatly qualified of

managing any operational scenario and are known as good decision makers.

Furthermore, in an organization, it is important to interact with finance

professionals as well and should be aware on how one’s actions has an impact on their
figures. The restrictions regarding the market decisions need to be implied and for that
support of financial knowledge is favourably recommended to make sure that the
decision is not placing the financial side of the firm at stake.

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2nd Floor, SS Building
Bolton Street, Davao City
Telefax: (082)227-5456 Local 131

As an add-on, the capability to interpret financial data will aid in understanding

resource acquisition and allocation for connecting more efficiently with the firm’s
financial managers.

It is vital for a professional to be furnished with instruments in financial decision

making in order to assist him to:

Examine and Interpret financial statements;

Understand the cost-benefit analysis;
Make decision regarding price of goods or commodities;
Decide a product mix and opt for the best suited option of financing the need.

Consequently, finance is a vital phase of any organization that one needs to be

knowledgeable for maximization of profits which is the main objective of an organization
and provide to the organization efficiently and effectively.

Big Picture in Focus: ULOc: Deliberate alternative forms

of business organizations, manager’s role as agents of
stockholders

Essential Knowledge

I. Forms of Business Organizations

There are three (3) forms of business organizations, namely:

1. Proprietorship. It is an independent business owned and managed

by one person.

2. Partnership. It is a business organization that has two or more owners and

can operate under various levels of requirements, which ranges from casual,
verbal agreements to formal arrangements registered with the Securities and
Exchange Commission (SEC) whereby this organization does business.

3. Corporation. It is a lawful body formed by the country’s government and is

detached and independent from its stockholders and administrators.

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2nd Floor, SS Building
Bolton Street, Davao City
Telefax: (082)227-5456 Local 131

❖ Advantages and disadvantages of the forms of business organizations:

1. Proprietorship

2. Partnership

3. Corporation

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2nd Floor, SS Building
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Telefax: (082)227-5456 Local 131

II. Manager’s Role as Agents of Stockholders

III. The Manager’s Role within the Organization

In an organization, there are ladders of position titles. The organizational chart or

the structure of the organization and the relationships of the jobs and responsibilities, from
the top down, may include CEO, president, vice president, director, then manager.
Everyone of them performs separate and critical functions, allowing the organization to
operate to meet its financial obligations, and gain a profit.

The higher you climb in the organization’s ladders, the extend you take actions from
the day-to-day operations and work with the company’s employees, higher management
and even with stockholders. While the CEO/president and vice presidents focus more
planning, formulating strategy, decision-making on investment, and overall management,
managers are directly concerned with the individuals giving service to customers,
producing and selling the firm’s goods or services, and providing internal support to other
groups.

Moreover, the manager acts as a channel from senior management for the
translation of higher-level strategies and goals into operational plans that propels the
business operations. In such position, the manager is responsible to senior management
as well as stockholders for performance and to front-line employees for guidance,
motivation, and support. For managers it is normal to feel as if they are pulled between
the demands of top officials and the needs of the personnel executing the work of the
organization.

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2nd Floor, SS Building
Bolton Street, Davao City
Telefax: (082)227-5456 Local 131

IV. The Work of the Manager

The manager’s functions are numerous and varied, which includes among others:

1. Hiring, staffing and training new employees

2. Coaching and developing present employees
3. Resolving performance problems and terminations
4. Assisting resolutions on operational problems
5. Guiding timely performance evaluations
6. Translating corporate objectives into well-designed and useful objections
7. Supervising performance and introducing action to strengthen better results
8. Reviewing and monitoring budgets and expenditures
9. Tracing and reporting results of scorecards to senior management
10. Planning and goal-setting for future periods

Big Picture in Focus: ULOd: Understand business ethics and

corporate good governance

Essential Knowledge

I. Business Ethics

Before we proceed to the discussion of business ethics, first we have to know the
meaning of ethics. Generally speaking, ethics deals with standards and values, with
questions of what is right and what is good, what one should to do and not to do, and
what is a worthy person or life.
These standards and values have a vital for individuals and societies. They
provide guidance for individual activities and social interactions.
In societal contexts, it is important to have a little understanding and arrangement about
basic rights and responsibilities, on how one should treat others and what can be
expected from them. This give assurance in the performance and the health of the
community and its members. Some norms and values are well founded in our society.
Take for example, freedom and equality are essential values; we have rights to private
property and stealing and offending other people are considered wrong. In other cases,
society and individuals are challenged in more controversial and difficult normative
queries: Is abortion illegal? Is the death penalty fair? Is health care a right? Despite the
difficulties of these questions
and disagreement on the issues, people place a lot of thinking into them and discuss
these issues a great deal because we understand their importance for our lives and our
society.
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 College of Business Administration Education
2nd Floor, SS Building
Bolton Street, Davao City
Telefax: (082)227-5456 Local 131

Standards or norms and values are also vital for individuals and create a
fundamental layer of motivation and decision-making. There are times that we do things
simply because they are (economically) useful to us, and this can be quite correct.
However, we also make decisions and plan our lives based on norms and values. For
instance, we may reject an economically attractive action, deal, or job offer because it is
not in line with our values, conflicts with fundamental norms, contradicts what we stand
for, possibly smears our image, reputation and integrity, and so on and so forth. Personal
values are a crucial part of our self-identity. A good life is what we long for and is curious
about doing right to others, most specially on difficult situations and decisions.

As these examples demonstrate, norms and values are vital for society as well as
individual lives, it is important that we appropriately display them. In various everyday
circumstances, norms and values are actually not difficult, and we do not even actively
think about them. We realize rather well what is right and wrong, how we are supposed
to act, and instinctively obey given

Now we are done with the discussion of ethics. So, What Is Business Ethics?

Business ethics is the study of proper business policies and practices regarding
theoretically controversial subjects including corporate governance, insider trading,
bribery, discrimination, corporate social responsibility, and fiduciary responsibilities. The
law often guides business ethics, but at other times business ethics provide a
fundamental guide which businesses can opt to follow for public approval.

In the corporate world, business ethics makes sure that there exists a certain level
of trust between clients and with businesses they deal with the assurance to the public
a fair and just treatment.

The concept of business ethics began in the 1960s as corporations became more
aware of a rising consumer-based society that displayed issues with regards the
environment, social causes, and corporate responsibility. The increased focus on so-
called social concerns was a mark of the era. Since that period, the concept of business
ethics has advanced. Business ethics emerges beyond just a moral option between right
and wrong; it challenges to resolve what must be done by firms legally versus preserving
a competitive advantage over other businesses. and can display business ethics in
numerous methods.

There are 12 principles that outline the source of business ethics that you should
know and create awareness of your accountabilities in your workplace:

1. Honesty
It is very vital in all of your actions, and every communication you compose. When your
co-employees, clients or people see your honesty in making decisions, they start to trust
your company since you’re not only being truthful, you’re being straightforward and
sincere.
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2nd Floor, SS Building
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Telefax: (082)227-5456 Local 131

2. Integrity
If you are being ethical in business, this means you are maintaining a high level of
personal integrity. By this, you earn the trust of others, they maybe your customers,
team, your supervisors or higher management. By definition, integrity means possessing
a reliable character demonstrated by an arrangement of your thoughts, words and
deeds. Sometimes it requires you to be courageous morally to do the right thing, and it
requires inner strength to live up to your mistakes and admit your faults. Notwithstanding
the great pressure to take action otherwise, ethical business managers live by a moral
code they believe in, values to uphold and fight for what they believe – without sacrificing
their honor for the sake of just performing his job.

3. Keeping Your Promises

As a business manager, your word is one of the most vital means in the performance of
your work. You must keep every promise that you offer, and always be committed.

The trust you create as an ethical executive would mean people are likely to do business
with you, as you take every sensible effort to comply not only the letter, but the spirit of
the promises and commitments you have created.

4. Loyalty
You need to be loyal to both your organization, your team and yourself, while performing
within a strong scope in terms of moral. Demonstrating your loyalty will eventually build
trust, and displays that you place a high value on evolving the interests of both the
company and your team-mates. Remember that you should never place loyalty above
your other philosophies, or use it as an excuse for unethical behavior. Yes, you can
demonstrate your loyalty but always make an independent judgment, and should never
use information that you have gathered in confidence for your own personal
advancement.

5. Fairness
You must strive to be fair and just in all that you do. An ethical executive is committed to
fairness in all their actions, and do not attempt to practice their power for an unfair
advantage or use unethical methods to gain a competitive edge. They also never take
undue advantage of another person’s hardships and faults. To be an ethical executive
means that you are committed to being fair, engage justice in your decisions and treat
all individuals justly, with patience and recognition of diversity. Fairness also means open
mindedness. You should try to sincerely admit your mistakes, and to adjust your opinions
and positions appropriately.

6. Caring
This involves having an authentic concern for others, and possessing a sense of
compassion. An ethical business manager is considerate, generous and sympathetic to
both customers and employees.

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2nd Floor, SS Building
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Telefax: (082)227-5456 Local 131

7. Respect
To be ethical translates to treat everyone with reverence, revealing this by being well-
mannered and giving fair treatment to people regardless of their status in life. Respect
is provided since everyone is entitled to self-respect, confidentiality and privileges.
People are aware to the saying that you must try to treat others the way you would want
to be treated.

8. Obeying the law

Being an ethical executive, you must always abide by the law, and never violates the
laws, rules and regulations encircling your company’s activities.

9. Excellence
To be ethical in business means practicing excellence in everything you do. It makes
business sense when you give the highest quality of service or products, especially if
there is a continuous undertaking for improvement.

10. Being a Leader

If you want your team or employees to live by you, you need to lead by principles and
ethics, and put on an active role as a leader to be an irrefutable role model. The best
way you can compel an ethical attitude is to lead by example. A good leader is a good
follower.

11. Morale
An ethical business manager enriches the image of an organization, which at the same
time boosts the morale of his employees. Both the company’s reputation and the pride
and morale of its employees is very important. Therefore, as an ethical business
manager you need to prevent taking actions that demoralize this respect, and they take
immediate action to rectify any untoward behavior of other employees.

12. Accountability
Being ethical results to making yourself answerable to all your actions, and admitting
and recognizing personal accountability for your decisions, and any consequences that
may result from your decisions. An ethical manager, not just for personal reasons, will
stand up and take responsibility in front of his associates, the organization, and the
community.

Taking hold of yourself and your company to these standards will safeguard that
you’re not only shielded against any misconducts (if complying with these principles you
can’t do anything wrong), but you’ll impress upon your employers, clients and employees
alike, and shape a strong sense of trust with all of your stakeholders. This will be the
foundation that levels up your organization to the success that it merits to reach!

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2nd Floor, SS Building
Bolton Street, Davao City
Telefax: (082)227-5456 Local 131

II. Good Corporate Governance

Business organizations should have a systematic order within their organizations.

Corporate Governance deals with the set of rules that an entity follows when conducting
business. These rules provide the "road map" that managers follow to pursue the firm's
various goals, including maximizing its stock price.

Corporate Governance is basically a full disclosure of data and an account of an

organization’s financial condition, performance, ownership and authority, relationship
with shareholders and commitment to business ethics and morals. The significance of
corporate governance has augmented numerous times since the concept was
presented. With the start of globalization and competition, organization’s expectations
are no longer the chant for success. The current economic crisis is often attributed at
inadequate supervisory and check and balance systems for the business, which has led
to complications both geographically and in a social context.
“Healthy corporate governance practices are no longer the need of the law but
have become essential for the very survival of the organizations, the current economic
crisis has proven that beyond doubts”.

“Corporate Governance is the art of directing and controlling the organization by

balancing the needs of the various stakeholders. This often involves resolving conflicts
of interest between the various stakeholders and ensuring that the organization is
managed well-meaning that the processes, procedures and policies are implemented
according to the principles of transparency and accountability”.
https://www.managementstudyguide.com/corporate-governance-overview.htm

Every time one speaks about corporate governance, it must be implied that the
organizations have duties and responsibilities towards their shareholders and
stakeholders and therefore, need to be governed in accordance with the law and bearing
in mind the stakeholders and shareholders’ interests.

Another feature of corporate governance is that the concept of economic

efficiency must be tracked when directing, managing and controlling organizations.

For the last decade, Corporate Governance has been in the news or so following
a series of scandals that overwhelmed companies like Enron which led to their collapse
due to management. This prompted lawmakers all over the world to implement various
laws and rules to restrain in irresponsible corporate performance that would damage the
visions of the corporations and cause damage to their shareholders and stakeholders.

Generally speaking, corporate governance can cover the principles of rights and
fair treatment of the shareholders and the shareholders and following ethical business
standards together with practice of integrity.

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Therefore, good corporate governance relates that the processes of disclosure

and transparency are followed so as to provide lawmakers and shareholders as well as
the general public with specific and accurate information about the financial, operational
and other phases of the company.

From the earlier discussion, corporate governance is a term that concerns many
things and the bottom line for good corporate governance is the dual goal of maximizing
profits and in a transparent and accountable manner.

Self-Help: You can also refer to the sources below to help you further
understand the lesson:

CFIN 5:Corporate Finance by Scott Besley, Cengage Learning. Boston, MA, USA
BC 658.15 B46c 2017

Basic Finance by Scott Beasley & Eugene Brigham 2013-2015 edition Cengage
Learning BC-D 332 B46b 2013-2015

Introduction to Finance Markets, Investments, and Financial Management by Ronald

W. Melicher & Edgar A. Norton, 16th Edition, EPUB: 978-1-119-32111-8 2017

Fundamentals of Business Finance by Francisco & Eva San Andres (2016) Manila
Mind Shapers. MFI 658.15 Sa5f 2018

Business Accounting & Finance (2018) by Catherine Gawthorpe. Australia Cengage .

MC 657.674b 2018

Fundamentals of Financial Management by Eugene Brigham (2015). Cengage

Learning Asia. MFI 658.15 B76f 2015

Financial Management: Principles and Applications by Ma. Elena B. Cabrera. GIC

Enterprise Manila. MFI 658.15 C11f 2015

Financial Management by John Williams (2015). Arcler Press, New York, USA MFI
658.15 W67f 2015

https://www.henryharvin.com/blog/importance-of-finance-for-non-finance-professionals/

https://www.thebalancecareers.com/what-is-a-manager-2276096

https://www.slideshare.net/dinovocga/forms-of-business-organization-9113513?qid=a18686bb-
e63e-4472-9a0a-d4ed498591dc&v=&b=&from_search=1

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 College of Business Administration Education
2nd Floor, SS Building
Bolton Street, Davao City
Telefax: (082)227-5456 Local 131

https://www.investopedia.com/terms/b/business-ethics.asp

https://blog.udemy.com/business-ethics-examples/

https://www.managementstudyguide.com/corporate-governance-overview.htm

Let’s Check

Congratulations! You just finished learning the Overview of the Financial

System. Let us check your understanding of the concept.

Activity 1. MULTIPLE CHOICE. Encircle the correct answer of your choice. (35
pts.)

1. It refers to the basis of funding for a specific financial transaction.

a. Financial b. Finance c. Money d. Investment
2. A system that permits the exchange of funds between lenders, investors, and
borrowers and operates at national and global levels.
a. Financial System b. Financial Intermediary c. Financial Institution
3. It deals with decisions that all business firms formulate concerning cash flows,
including both inflows and outflows.
a. Financial Management, b. Managerial Management c. Management
4. It is an area of finance that focuses on the decisions made by businesses and
individuals as they choose securities for their investment portfolio.
a. Money b. Investment c. Financial Services d. Managerial Finance
5. It refers to functions provided by organizations that deal with the management of
money.
a. Money b. Investment c. Financial Services d. Managerial Finance
6. It deals with decisions that all firms make concerning their cash flows, including both
inflows and outflows.
a. Money b. Investment c. Financial Services d. Managerial Finance
7. It involves personnel decisions and employee relations, strategic planning, and the
general operations of the firm.
a. Management b. Marketing c. Accounting d. Information Systems
8. It is an entity involved in the business of engaging with financial and monetary
transactions such as deposits, loans, investments, and currency exchange.
a. Corporation b. Partnership c. Financial Institution
d. Financial Market
9. One is not a financial institution.
a. Commercial Bank b. Foreign Bank c. Thrifts d. Investment Bank
e. None of the above
10. It is the systematic and comprehensive recording of financial transactions of a
business. It deals with the process of summarizing, analyzing, and reporting these
transactions to oversight agencies, regulators, and tax collection entities.
a. Management b. Marketing c. Accounting d. Information Systems
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2nd Floor, SS Building
Bolton Street, Davao City
Telefax: (082)227-5456 Local 131

11. A form of business organization that is not an incorporated firm owned by one
person.
a. Partnership b. Proprietorship c. Corporation
12. It is a business organization that has two or more owners and can operate under
various levels of requirements, which ranges from casual, verbal agreements to
formal arrangements registered with the Securities and Exchange Commission
(SEC) whereby this organization does business.
a. Partnership b. Proprietorship c. Corporation
13. A form of business organization is a lawful body formed by the country's government
and detached and independent from its stockholders and administrators.
a. Partnership b. Proprietorship c. Corporation
14. It refers to the process of financing funds for profit or monetary gains.
a. Finance b. Funding c. Investment d. Deposit
15. It deals with standards and values, with questions of what is right and what is
good, what one should to do and not to do, and what is a worthy person or life.
a. Ethics b. Business Ethics c. Corporate Ethics
16. It is the study of proper business policies and practices regarding theoretically
controversial subjects including corporate governance, insider trading, bribery,
discrimination, corporate social responsibility, and fiduciary responsibilities.
a. Ethics b. Business Ethics c. Corporate Ethics

17. It is the full disclosure of data and an account of an organization’s financial

condition, performance, ownership and authority, relationship with shareholders
and commitment to business ethics and morals.
a. Company Governance b. Corporate Governance c. Governance
d. Good Corporate Governance
18. It relates that the processes of disclosure and transparency are followed so as to
provide lawmakers and shareholders as well as the general public with specific
and accurate information about the financial, operational and other phases of the
company.
a. Company Governance b. Corporate Governance c. Governance
d. Good Corporate Governance
19. One of these statements is NOT true:
a. In an organization, there are ladders of position titles.
b. The higher you climb in the organization’s ladders, the extend you take actions
from the day-to-day operations and work with the company’s employees, higher
management and even with stockholders.
c. the manager acts as a channel from senior management for the translation of
higher-level strategies and goals into operational plans that propels the business
operations.
d. None of the above
20. One of these items is not a principle in business ethics:
a. Honesty b. Integrity c. Obeying the law d. Patience

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2nd Floor, SS Building
Bolton Street, Davao City
Telefax: (082)227-5456 Local 131

Activity 2. Getting acquainted with the essential terms in the study of financial
management is not enough; you should also be able to explain its inter-relationships.
Now, I will require you to define your answers thoroughly.

1. Expound on the statement: “Finance is not exactly about money.”

In a Nutshell

Activity 3. The study of financial management is indeed an advantage to becoming a

finance manager. It can be a very complex study that requires a more in-depth
knowledge of the financial industry outside the classroom and school.
Based on the definition of the essential terms in the study of financial
management and the learning activities that you have done, please feel free to write
your arguments or lessons learned below. I have indicated my discussions or teachings
learned.

1. Business organizations should have a systematic order within their organizations.

2. Corporate governance is a term that concerns many things and the bottom line for
good corporate governance is the dual goal of maximizing profits and in a
transparent and accountable manner.

Your Turn

` 3.

4.

5.

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2nd Floor, SS Building
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Telefax: (082)227-5456 Local 131

6.

7.

8.

9.

10.

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