An Introductory to Business Finance. Readers will be able to understand and appreciate the study of Business Finance. not my own words, references are; Business Finance, 2nd edition,
Roberto G. Medina
Elements of Business Finance, updated edition 2002, Gregorio Miranda, Ph.D.
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Business finance -nature and aims of business
1. Nature and Aims of Business
An introductory to Business Finance
2. 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.
Philippine Economy
3. 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.
4. 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 cell phone
models, video equipment, portable computers,
etc. Profit-making has been adapted as a
measure to motivate enterprising persons to
engage in business.
5. What is Business?
Business is any lawful economic
activity concerned with the production
and/or distribution of goods or services
for profit. An entity is still a business if its
objective is to make profits.
The amount of capital
investment, the size of the organization,
and the number of employees are also
immaterial in determining if an
economic activity qualifies as business.
6. Business, Classified
Providing the raw materials
from which goods are fashioned.
Converting raw materials, parts, etc., into finished
products by means of fabrication and assembly processes.
Marketing – or distribution – which involves most
noticeably moving finished products from producer to consumer
as efficiently as possible.
Providing services, including not only personal services but
also those which are essential to business activity, such as banking,
advertising, insurance, communications, research, etc.
7. Another way of classifying
businesses is to divide them according
to the goods they produce. Some
firms produce goods that are used by
a final consumer.
Consumer and Producer Goods
8. We can also divide
businesses according to the life
of their products. Items of
manufacture which have a
relatively short lifetime are
called durable goods, while
items with longer spam of
lifetime or can be used many
times are called nondurable
goods.
Durable and Nondurable Goods
9. A very popular method of classifying
businesses is to divide them into the major
industries, grouping together those which
produce raw materials, those which process
these raw materials, those which distribute the
final product to the consumer, service
industries, etc.
Accordingly, we may classify businesses
into the following major types (kinds of
business):
According to Industry Groups or
Sectors
10. The word commerce, from the
Latin term commercium, is a
combination of two root words com
meaning “together” and mercis
signifying “wares”. Businesses firms
which are engaged in the buying and
selling of goods and services are
classified as those falling under
commerce.
Commerce
11. Industries are those which are mainly concerned with production. Goods
produced are those which may be intended for ultimate consumption and which are
called consumer’s goods, or those which are intended for use of business and
industry and which are called producer’s goods.
Industry may be further classified into the following:
Industry
a. Genetic Industries
b. Extractive Industries
c. Manufacturing industries
d. Construction industries
13. Extractive Industries
are businesses involved in extraction of goods from natural
resources which include mining, lumbering, hunting, and fishing.
14. are those which convert raw
materials into finished products.
Examples of these are firms engaged
in the manufacture of drugs, plastics,
food, liquor, footwear, motor cars,
tools, office supplies, household
appliances, and many others.
Manufacturing industries
15. consists of firms engaged
in building infrastructures like
airports, seaports, dams, and
highways. Those involved in the
construction of dwelling houses
are included.
Construction industries
16. Services
A service business is one which sells services to buyers. Service firms may
be classified as:
• Recreation, such as movie houses, television and radio stations, theaters for
drama and stage presentations, and the like;
17. Personal, such as restaurants, barber shops,
transportations, hotels, tailoring shops, and
the like;
18. Finance, such as banks, insurance companies,
investment houses, financing institutions, credit
unions, savings and loans association, and the
like.
19. A business firm is established primarily for profit. At times, however, short-term and
long term profits are sacrificed in order to attain other goals such as.
1. Political Influence
2. Family control of the business
3. Community involvement
To survive and grow, business firms must attain the following multiple objectives:
1. The provision of products and services to the community
2. The satisfaction of personal objectives like:
• Profits for owners
• Adequate salaries and compensation for executives and employees
• Psychic income for all, including pride in work, security, recognition, and acceptance.
3. Protection and enhancement of the human and physical resources of society; and
4. Economy and effectiveness of operations.
Objectives of Business
20.
21. No. 1
Why do we need to study the nature and aims of
business?
22. No. 2
In your own words as what you have
understood, What is Business?
23. No. 3
Explain what are Durable goods and give
at least one example of it.
24. No. 4
Explain what are Nondurable goods and Give at
least two examples of it.
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?
Business is any lawful economic activity concerned with the production and/or distribution of goods or services for profit. An entity is still a business if its objective is to make profits.
The amount of capital investment, the size of the organization, and the number of employees are also immaterial in determining if an economic activity qualifies as business.
Businesses, Classified
Four basic functions:
Providing the raw materials from which goods are fashioned.
Converting raw materials, parts, etc., into finished products by means of fabrication and assembly processes.
Marketing – or distribution – which involves most noticeably moving finished products from producer to consumer as efficiently as possible.
Providing services, including not only personal services but also those which are essential to business activity, such as banking, advertising, insurance, communications, research, etc.
These tasks define the four major categories of business enterprise. Some businesses encompass more than one of these categories; others are limited to a single function. But in each case, the need for men, materials, and machinery is different and can only be determined by observing the actual work performed by the business.
Consumer and Producer Goods. Another way of classifying businesses is to divide them according to the goods they produce. Some firms produce goods that are used by a final consumer.
Other firms produced goods that are used by businesses to produce still more goods.
Durable and Nondurable Goods. We can also divide businesses according to the life of their products. Items of manufacture which have a relatively short lifetime are called durable goods, while items with longer spam of lifetime or can be used many times are called durable goods.
According to Industry Groups or Sectors. A very popular method of classifying businesses is to divide them into the major industries, grouping together those which produce raw materials, those which process these raw materials, those which distribute the final product to the consumer, service industries, etc.
Accordingly, we may classify businesses into the following major types (kinds of business):
The word commerce, from the Latin term commercium, is a combination of two root words com meaning “together” and mercis signifying “wares”. Businesses firms which are engaged in the buying and selling of goods and services are classified as those falling under commerce.
Genetic Industries
are businesses involved in agriculture, forestry, and fish culture.
Extractive Industries
are businesses involved in extraction of goods from natural resources which include mining, lumbering, hunting, and fishing.
Manufacturing industries
are those which convert raw materials into finished products. Examples of these are firms engaged in the manufacture of drugs, plastics, food, liquor, footwear, motor cars, tools, office supplies, household appliances, and many others.
Construction industries
consists of firms engaged in building infrastructures like airports, seaports, dams, and highways. Those involved in the construction of dwelling houses are included.
Services
A service business is one which sells services to buyers. Service firms may be classified as:
Recreation, such as movie houses, television and radio stations, theaters for drama and stage presentations, and the like;
Personal, such as restaurants, barber shops, transportations, hotels, tailoring shops, and the like;
Finance, such as banks, insurance companies, investment houses, financing institutions, credit unions, savings and loans association, and the like.
Objectives of Business
A business firm is established primarily for profit. At times, however, short-term and long term profits are sacrificed in order to attain other goals such as.
Political Influence
Family control of the business
Community involvement
To survive and grow, business firms must attain the following multiple objectives:
The provision of products and services to the community
The satisfaction of personal objectives like:
Profits for owners
Adequate salaries and compensation for executives and employees
Psychic income for all, including pride in work, security, recognition, and acceptance.
Protection and enhancement of the human and physical resources of society; and
Economy and effectiveness of operations.