Business Finance Week 1 & 2

12
BUSINESS FINANCE
First Quarter
LEARNING ACTIVITY SHEETS

Republic of the Philippines
Department of Education
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Learning Activity Sheet in Business Finance
(Grade 12)
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Table of Contents
Compentency Page

number
Explain the major role of financial management ..................... 1
and the different individuals involved
Distinguish a financial institution from financial ..................... 10
instrument and financial market
Explain the flow of funds within an organization- ..................... 23
through and from the enterprise - and the role of
financial manager
Identify the steps in the financial planning ..................... 33
process
Illustrate the formula and format for the ..................... 39
preparation of budgets and projected financial
statement
Explain tools in managing cash, receivables, ..................... 48
and inventory
Compare and contrast the loan requirements of ..................... 56
the different bank and nonbank institutions and
cite these institutions in the locality
Calculate future value and present value of ...................... 68
money
Compute loan amortization using mathematical .................... 77
concepts and the present value tables
Apply mathematical concepts and tools in ..................... 84
computing for finance and investment problems
Explain the risk-return trade-off ...................... 94
ii

BUSINESS FINANCE
Name of Learner: ________________________________ Grade Level: _______
Section: ________________________________________ Date: _____________
LEARNING ACTIVITY SHEET
ROLES OF FINANCIAL MANAGEMENT AND THE DIFFERENT

INDIVIDUALS INVOLVED
Background Information for Learners
Financial management deals with decisions that are supposed to maximize the
shareholders’ wealth (Cayanan 2015). These decisions will ultimately affect the market’s
perception of the company and influence the share price. Financial management also refers to
the effective and efficient planning, organizing, directing and controlling of financial
activities and processes of an organization. This includes but is not limited to fund
procurement, allocation of financial resources, utilization of funds, etc. With the definition of
financial management provided by different authors financial management role in an
organization is very much important.
Roles of Financial Management
a. Financial decisions and controls: Financial management and financial managers

play a crucial role in making financial decisions and exercising control over finances in the
organization. They make use of techniques like ratio analysis, financial forecasting, profit
and loss analysis, etc.
b. Financial Planning: The finance managers are responsible for the planning of
financial activities and resources in the organization. To this end, they use available data to
understand the needs and priorities of the organization, as well as the overall economic
situation and make plans and budgets for the same purpose.
c. Capital Management: It is the responsibility of financial management to estimate the
capital requirements of the organization from time to time, determines the capital structure
and composition and makes the choice of source of funding for the capital needs.
d. Allocation and Utilization of financial resources: Financial management ensures
that all financial resources of the organizations are used and invested effectively and
efficiently so that the organization is profitable, sustainable and viable in the long-run.
e. Cash Flow Management: It is extremely important for organizations to have
sufficient working capital and cash flow to meet their operational expenses and emergencies.
Financial management tracks account payable and receivable to ensure there is sufficient
cash flow available at all times.
f. Disposal of Surplus: The decisions on how the surplus or profits of the organizations
is utilized is taken by the financial managers of the organizations. They decide if dividends
should be distributed and how much as well as the proportion of profits that must be retained
and ploughed back into the business.
Note: Practice Personal Hygiene Protocols at all times . 1

g. Financial Reporting: Financial management maintains all necessary reports related
to the finance of the organization and uses this as the database for forecasting and planning
financial activities.
h. Risk Management: Sound financial management prepares the organization to
forecast risks, put in place mitigation plans as well as to meet unforeseen risks and
emergencies effectively.
The goal of financial management is to maximize the value of shares of stocks.

Managers of a corporation are responsible for making the decisions for the company that
would lead towards shareholders’ wealth maximization. The need on who will act such a role
in the financial management in an organization is a must. Therefore, the diagram below
shows a corporate organizational structure where you can picture the different individuals
involved in the organization.
The table below shows the roles of different individuals involved in the Financial
Management
People Involved Roles/Functions/Responsibilities
Shareholders The owners or investors in the firm.
Board of It is the highest policy making body in a corporation. Its primary

Directors responsibility is to ensure that the corporation is operating to serve the
best interest of the stockholders.
Hence, the responsibilities of the board of directors:
- Setting policies on investments, capital structure and dividend
policies
- Approving company’s strategies, goals and budgets
- Appointing and removing members of the top management
including the president
- Determining top management’s compensation
- Approving the information and other disclosures reported in the
financial statements
President - Overseeing the operations of a company and ensuring that the
strategies as approved by the board are implemented as planned
- Performing all areas of management: planning, organizing,
staffing, directing and controlling
- Representing the company in professional, social, and civic
activities
VP for - Formulating marketing strategies and plans
Marketing - Directing and coordinating company sales
- Performing market and competitor analysis
- Analyzing and evaluating the effectiveness and cost of marketing
methods applied
- Conducting or directing research that will allow the company identify
new marketing opportunities, e.g. variants of the existing
products/services already offered in the market
- Promoting good relationships with customers and distributors
VP for - Ensuring production meets customer demands
Production - Identifying production technology/process that minimizes
production cost and make the company cost competitive
- Coming up with a production plan that maximizes the utilization
of the company’s production facilities
- Identifying adequate and cheap raw material suppliers
VP for - Coordinating the functions of administration, finance, and
Administration marketing departments
- Assisting other departments in hiring employees
- Providing assistance in payroll preparation, payment of vendors,
and collection of receivables
- Determining the location and the maximum amount of office
space needed by the company
- Identifying means, processes, or systems that will minimize the
operating costs of the company
VP for Finance - Funding long term investments (such as company expansions)
and working capital which deals with the day to day operations of the
company
- Determining the type of investment for the firm
- Dealing with the daily operations of the company
- Developing policies on dividends

LEARNING COMPETENCY
Explain the major role of financial management and the different individuals involved
(Quarter 1, Week 1-2) BF12-IIIa-1
Exercise 1. Directions: Below are quotes from CEO’s of business organizations. Give your
insights in every quote based on what you have read. Use the diagram below for your
answers.
1. “Finance plays a critical role across every aspect of our business. We enable the
business to turn our ambition and strategy into sustainable, consistent and superior
performance” - Jean-Marc Huët of Unilever
2. “It’s very exciting because you are not just thinking of today but what the company will
need in the future” - Ysmael V. Baysa. of Jollibee
3. “Yesterday’s solutions are never adequate for the future” - Albert De Larrazabal of
Globe Telecom
4. “Now, we don’t go out because we need funds. We go out because it’s an opportunity.” –
Jose T. Sio of SM Corporation
Quote Number Your Insights

1

Exercise 2. Directions: The statements below are related to the functions of VP of
Finance. Write F if the statement is related to financing, I for investing, O for operating
and D if the statement is related to dividend policies. Write your answer on the space
provided for.
______1. Plan for expected excess in cash using Financial Planning tools.
______2. Determine working capital.
______3. Declare dividend to shareholders.
______4. Choose long-term investment.
______5. Purchase land for sale.
______6. Borrow additional fund to the bank.
______7. Declare 40% of income use to purchase inventories.
______8. Determine salaries of employees.
______9. Division of surplus to the shareholders of the firm.
______10. Purchase 1 million worth of equipment with return on investment or ROI in 5
years.
Exercise 3. Directions: Develop an organization structure of your chosen business. Make a

list of people involved in the organization and enumerate their possible duties and functions.
Write your answer on the space below.
SHAREHOLDERS
BOARD OF DIRECTORS
PRESIDENT (CEO)
VP FOR VP FOR VP FOR VP FOR

MARKETING FINANCE PRODUCTION ADMINISTRATION
Exercise 4. Directions: Complete the given statement in each item by writing A if it is

applicable to choice (a), B if the statement is applicable to (b), C if the statement is
applicable to both (a) and (b), and D if the statement is not applicable to both (a) and (b).
Write your answer on the space provided for.
______1. The shareholder in a corporation is considered as ______.

a. owner
b. stockholder
______2. Financing as one function of VP for Finance is used ______.
a. to determine the appropriate capital structure of the company
b. to raise funds from debt and equity
______3. VP for marketing function includes ____________.
a. directing and coordinating company sales.
b. performing human resource analysis.
______4. Appointing and removing members of the top management including the president
is a role of ____.
a. shareholders
b. Board of Directors
______5. Finance is a/an __________ of managing money.
a. art
b. science
______6. Financing decision includes_____.
a. making decisions on how to fund long term investments.
b. making decisions on how to maintain working capital ______7.
VP for production ensures ______.
a. quality of products
b. liquidity of the firm
______8. VP for marketing prepares _____.
a. sales forecast
b. budget forecast
______9. Investment could be _____.
a. short-term
b. long-term
______10. Owners of the firm includes________.
a. VP for finance
b. VP for operations
Exercise 5. Directions: The different departments cannot stand alone; therefore, they need the
support of other departments to facilitate the maximization of shareholders’ wealth. Explain
and discuss possible contribution of one department to the other departments. Use the given
diagrams for your answers.
Sample:
FINANCE PRODUCTION
• The finance provides budget to the department as bases in producing
product for the firm.
MARKETING
• The finance provides copy of cost incurred in promoting product to
maximize fund allotted for promotion.

OPERATION
• The finance provides the budget for recruitment and selection since
training and developing people involve cost that would possibly lessen
the income of the firm.
a)
PRODUCTION FINANCE
MARKETING
OPERATION
b)
MARKETING FINANCE
PRODUCTION
OPERATION
c)
OPERATION FINANCE
PRODUCTION
MARKETING
Exercise 6: Directions: From your readings on the role of financial management, determine
what is being asked in column B from the choices in column A. Write the letter of your
choice in the space provided for.
Column A Column B

______1. It means positive result in the operation on the business
A. Surplus firm.
B. Capital ______2. This includes statement of income, statement of cash
budgeting flows, statement of retained earnings, etc.
______3. It is used to analyze company’s liquidity, solvency,
C. Financial Report efficiency and profitability of the firm.
D. Financial ______4. It is a process a business uses to evaluate potential
Planning E. Profit and major projects or investments.
loss analysis ______5. It is the process of framing financial policies in relation
to procurement, investment and administration of funds of
F. ratio analysis an enterprise.
G. capital ______6. It means managing the inflow and outflow of cash.
______7. It measures the ability of the company to generate
management income
H. cash flow from the use of its assets and invested capital as well as
management control its cost.
______8. This includes cash, short-term investment, stocks and
I. financial resources bonds.
______9. It means managing uncertainties that would affect the
J. risk management business firm.
______10. It refers to a strategy that requires monitoring a
K. financial decisions company's current assets and liabilities to ensure its
efficient operation.
Rubric for Scoring Exercises 1 and 5

Name:______________________________ Date:________
Topic:______________________________ Hour:_______
4 3 2 1
Score
Main Topic Strong main idea Adequate main idea Weakly stated main Unclear main idea
restated in the restated in the idea weakly not restated in
closing sentence closing sentence restated in closing closing sentence
sentence
Supporting Three or more Two supporting One supporting No supporting
Sentences supporting sentences sentences sentences
per paragraph sentence
per paragraph
per paragraph
Grammar Few, if any, errors Several errors that Many errors that Many errors that
do not interfere interfere with make it illegible
with meaning meaning
Source: https://study.com/academy/popular/paragraph-writing-rubrics.html

Rubric for Scoring Exercises 3
Name:______________________________ Date:________
Topic:______________________________ Hour:_______
4 3 2 1 Score
Content Knowledge The chart shows The chart The chart is lacking The tree map is
all the required is lacking in elements lacking in elements
elements. The in elements required. required. There are
responsibilities of required. The responsibilities no stated
all the branches The of 1 of the branches responsibilities of the
and levels take responsibilities of and levels are branches and levels
into consideration 2 of the branches present in detailed
and levels are statements.
present in detaile
d statements.
Format/presentation The chart is of The chart is the The chart is correct Not on required paper
exceptional quality correct size, clean paper size, but size and poorly
and presentation. and neatly poorly presented. presented.
displayed.
Grammar The details are The details are The details are The details are not
complete complete complete complete statements
statements with statements with statements and and contain errors that
no errors. minimal errors. contain errors that completely interrupt
somewhat interrupt the flow of
the flow of communication.
communication
Reflection

Complete this statement:
What I have learned in this activity:

___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
References:
• Department of Education Business Finance Teaching Guide

• Florendo, Joselito G (2016). Fundamentals of Accountancy, Business and
Management (1 ed.) Rex Book Store
st
• https://talentedge.com/articles/role-financial-management-organization/
• https://www.investopedia.com/terms/c/capitalbudgeting.asp
• https://www.managementstudyguide.com/financial -planning.htm
• https://www.investopedia.com/terms/w/workingcapitalmanagement.asp
Prepared by:
ABEMAILA L. DELA CRUZ

Cordova National High School

Answer Key
Exercise 1. Answers may vary 4. B
Exercise 2 5. C
1. I 6. C
2. O 7. A
3. D 8. A
4. I 9. C
5. I 10. D
6. F
7. F Exercise 5 Answer may vary
8. O Exercise 6
9. D 1. A
10. I 2. C
3. F
Exercise 3 Answer may vary 4. B
5. D
Exercise 4 6. H
1. C 7. E
2. C 8. I 3. A 9. J
10. G
Prepared by:
ABEMAILA L. DELA CRUZ

Cordova National High School

BUSINESS FINANCE
Name of Learner: _____________________________________ Grade Level: ________
Section: _____________________________________________ Date: ______________
FINANCIAL INSTITUTION, FINANCIAL INSTRUMENT AND

FINANCIAL MARKET
Financial institutions/ intermediaries are organizations that perform certain financial

and monetary transactions/activities such as deposits, accepts investments currency
exchange and provide loans to businesses. These are the firms that bridge the gap between
surplus units (SUs) or investors/lenders and deficit units (DUs) or borrowers. They channel
funds from lenders to borrowers and include depository and non-depository institutions.
Other than being a channel, they are lenders and borrowers at times. When they
underwrite securities or act as brokers or dealers, they are intermediaries. If they buy
securities, they are investors or lenders, and when they are the ones issuing securities, they
are borrowers.
Some of the major categories of financial institutions are Commercial Banks,

Investment Banks, Insurance Companies, Brokerages, Investment Companies and Nonbank
Financial Institutions.
Financial Instrument. Monetary contract between parties or any contract that gives rise to
a financial asset of one entity and a financial liability or equity instrument of another entity.
They can be created, traded, modified and settled.
TYPES OF FINANCIAL INSTRUMENTS:
-Deposits
-SDRs (Special Drawing Rights)
-Borrowings
-Loans
-Shares and other equity
-Debentures or bonds
-Other account receivables & payables

-Financial derivatives
-Letter of guarantee
-Letter of credit
-Financial commitments
-Pledged financial assets
In finance, financial instruments are classified as to their term or maturity date. They can
either be short- term (with maturity of one year or less) or long- term (with maturity of more
than one year). Short- term instruments belong to the money market, while long- term
instruments belong to the capital market.
Financial Market refers to a marketplace, where creation and trading of financial assets,
such as shares, debentures, bonds, derivatives, currencies, etc. take place. It plays a crucial
role in allocating limited resources, in the country’s economy. It acts as an intermediary
between the savers and investors by mobilizing funds between them.
The financial market provides a platform to the buyers and sellers to meet for trading assets
at a price determined by the demand and supply forces.
Financial markets are classified as either (1) primary or secondary market or (2) money or
capital market. Although we have other classifications of financial markets, these two are the
basic classifications of financial markets.
Money Market: The market where monetary assets such as commercial paper, certificate
of deposits, treasury bills, etc. which mature within a year, are traded is called money
market. It is the market for short-term funds. No such market exists physically; the
transactions are performed over a virtual network, i.e. fax, internet or phone.
Capital Market: The market where medium and long term financial assets are traded in the
capital market. It is divided into two types:
(a) Primary Market: A financial market, wherein the company listed on an exchange,
for the first time, issues new security or already listed company brings the fresh issue.
(b) Secondary Market: Alternately known as the Stock market, a secondary market is
an organized marketplace, wherein already issued securities are traded between investors,
such as individuals, merchant bankers, stockbrokers and mutual funds.
(Mariano, N.L. (2017) Capital Markets. Rex Book Store)
Now, try this!

After reading the main concepts on financial institution, financial instrument and
financial market above, accomplish the following activities with the best that you can by
answering the questions given.
Learning Competency:
Distinguish financial institution from financial instrument and financial market
(ABM_BF12-IIIa-2) Quarter 1- Week 1 & 2
Exercise 1. TRUE/FALSE
Directions: Read each statement below carefully. Write X if the statement is TRUE and Y
if otherwise on the space provided for.
______ 1. Financial institution matches the supply and demand for funds.
______ 2. Financial system channels the funds from the savings unit to the deficit units.
______ 3. Financial instrument and securities are traded in the financial market.
______ 4. Financial intermediaries provide channel through which the central bank
can influence the economy, in general and the financial system, in
particular.
______ 5. Borrowers and savers fall under deficit units.
______ 6. Bank is an example of financial intermediary.
______ 7. Lender is otherwise known as savings unit.
______ 8. Financial institutions include banks, credit unions, asset management firms,
building societies, and stock brokerages, among others.
______ 9. Borrowers are also known as creditors.
_____ 10. Financial institutions can be divided in two major parts: Banking
Institution and Non-banking institution.
_____ 11. Financial intermediary links the savers and users of funds.
_____ 12. When the BSP produces a surplus in the currency of the country, inflation will
be uncontrollable.
_____ 13. Globalization permits foreign participants to be part of the financial system. _____
14. Exchange rates is one of the activities in a financial system.
_____ 15. Financial systems affect a country’s economy.
Exercise 2. FINANCE TERMS
Directions: Each term in the following list is essentially or nearly a synonym for another in the same
list. Identify these pairs by putting the letter of the synonym on the blank provided for.
Term Means essentially the same as
a. appreciation ________________
b. supply of foreign currency ________________
c. law of one price ________________
d. dirty float ________________
e. floating exchange rate ________________
f. devaluation ________________
g. demand for domestic currency ________________
h. pegged exchange rate ________________

i. revaluation ________________
j. fixed exchange rate ________________
k. managed float ________________
l. depreciation ________________
m. purchasing power parity ________________
n. flexible exchange rate ________________
Exercise 3. SENTENCE ANALYSIS
Directions: Read the following statements below and identify whether:
A- Both statements are TRUE C- 1st statement is TRUE; 2nd statement is FALSE
B- Both statements are FALSE D- 1st statement is FALSE; 2nd statement is TRUE
Write the letter of your answer on the space provided before each number. Use CAPITAL letters
only.
_____1. Capital markets carry out the desirable socioeconomic function of directing
capital to productive uses.
- Capital markets can be in a national or an international setting.
_____2. Debt is defined as money that is borrowed and must be repaid.
- Equity is money that is invested in return for a percentage of ownership.
_____3. All investments are risky.

- Basically, a higher rate of return means a higher risk.
_____4. When savers make investments, they convert risk-free assets into risky assets.
- Cash or savings are risk-free assets.
_____5. Mutual funds are pools of money managed by an investment bank.

-This investment bank is investing in stocks and bonds all over the world.
_____6. Financial intermediaries are very important in the capital marketplace.

- Bank loan is a financial intermediary.
_____7. In direct investments, the company invests in the capital market with its own effort.
-While in the indirect investment, the company invests through a financial intermediary.
_____8. Creditors, or debt holders, purchase debt securities and deduct future interest income
in return for their investment.
-When investors buy bonds, they are lending the issuers of the bonds their money.
_____9. The most common example of a debt instrument is the bond.

-All types of organizations can issue bonds.
____10. Stocks are the type of equity security with which most people are familiar.
-When investors buy stock, they owe a share of a company’s assets and earnings.
Exercise 4. FINANCIAL SYSTEM
Directions: Visit the BSP website (http://www.bsp.gov.ph/) and let’s find out how well you
internalize the information from the website by answering this activity. Choose the letter that

corresponds to your answer. Write your answer on the space provided for. ______ 1. Which
of the following actions will be appropriate if there is an inflationary pressure due to
excessive demand?
a. BSP to slow down inflation by implementing incrementing monetary policy.
b. BSP to slow down inflation by implementing contractionary monetary policy.
c. BSP check the availability and cost of money in circulation and identify if it matches the demand.
d. Only B and C
______ 2. What might be the possible reason explaining ‘why BSP adopts
inflation targeting?’
a. Increases accountability of the financial system and helps build credibility
b. Enables comprehensive approach to monetary policy
c. Allows mere focus on price stability
d. All of the above
______ 3. What might happen if The BSP increases policy interest rate?
a. It increases accountability of the financial system and helps build credibility.
b. Banks’ interest rates will follow the increase.
c. There will be lower cost of borrowing.
d. There will be an excessive demand for currency.
______ 4. The first pillar of the BSP focuses on ‘Price Stability,’ what does it imply?
a. All banks should help BSP make the price of goods and services stable.
b. They focus on preserving of purchasing power.
c. The BSP tries to lower cost of borrowing.
d. The citizens have the ability to buy goods and services in a reasonable price.
______ 5. Financial stability serves as the 2 Pillar of the BSP. How can BSP sustain
nd
its 2 mandate?
nd
a. The BSP should sustain it through inflation targeting and monitoring.

b. The BSP should sustain it through banking supervision and regulation.
c. The BSP should sustain it through close monitoring of banks and other financial institutions.
d. The BSP should sustain it through financial literacy campaign to government, households and firms.
______ 6. One of the supervising and regulating duties of the BSP is the surveillance to
financial institutions. For banks, one thing they check is the implementation of the so
called, AML Act, which stands for?
a. Anti-Money Laundering Act
b. Anti-Money Loandering Act
c. Anti-Mobile Loandering Act
d. Anti-Mobile Laundering Act
______ 7. What will happen when the BSP accomplishes its supervising and regulating duties of
financial institutions?
a. The country will have a stable and manageable inflation.
b. The BSP will have complied with Consumer Protection Laws and Safety and Soundness of
Financial Institutions.
c. The BSP will have good implementation of the AML Act since there is a close monitoring of
financial institutions.
d. The BSP will conduct a consistent and reliable financial literacy campaign to government,
households and firms.

______ 8. What should the BSP do to ensure safe and efficient payments and settlements of financial
transactions?
a. It must comply with the Consumer Protection Laws and Safety and Soundness of Financial
Institutions.
b. It must efficiently operate the PhilPaSS for transacting parties that directly benefit the financial
system.
c. It must implement the AML Act and conducts a close surveillance of financial institutions.
d. It must strengthen its efforts to financial literacy campaign for the government, households and
firms.
______ 9. Which of the following fall under the other functions of the BSP?
a. They maintain price stability.
b. They serve as custodian of official reserves.
c. They implement the AML Act and conduct a close surveillance of financial institutions.
d. They support financial education literacy campaign.
______ 10. In order to have efficient payments and settlement system, the BSP owns
the PhilPaSS. What does PhilPaSS stand for?
a. Philippine Pricing and Settlements System
b. Philippine Pricing and Settling System
c. Philippine Payments and Settling System
d. Philippine Payments and Settlements System
______ 11. BSP grants licenses and special authorities to the following ______________
a. pawnshops, mutual fund companies and schools.
b. banking institutions, other financial institutions, NBFI w/o quasi banking functions.
c. commercial banks, universal banks, thrift banks, cooperative banks, rural banks.
d. banking Institutions, other financial institutions, SEC, CDA, IC.
______ 12. This happens when the financial system is able to effectively distribute and
manage FUNDS between surplus (savers) and deficit units (spenders) and RISKS
attendant to the movement of funds and provision of services.
a. financial surplus
b. financial stability
c. efficient financial system
d. price stability
______13. If the BSP maintains its credibility, then inflation expectations will ___________
a. allow greater focus on price stability.
b. remain well-anchored.
c. promote transparency in monetary policy.
d. become forward-looking.
______14. If the investment and consumer growth will be slower then, aggregate demand growth will
___________ .
a. remain well-anchored.
b. be slower too.
c. be manageable and ideal.
d. become forward-looking.
______ 15. This refers to the action taken to manage the availability and cost of money and credit to
attain stable prices.

a. Inflation targeting
b. Monetary Policy
c. Rediscounting
d. Redress and Literacy
Exercise 5: FINANCIAL INSTITUTIONS

Directions: Identify the following banking institutions into their respective group. Write
UBUniversal Banks; CB-Commercial Banks; TB-Thrift Banks; CPB- Cooperative Banks; and
RBRural Banks.
BANKS LOGO RESPECTIVE

GROUP
1. Security Bank Corporation
2. Robinsons Bank Corporation
3 . Land Bank of the Philippines
4 . Philippine Veterans Bank
5 . Philippine Business Bank
6. FICO Bank
7 . Sterling Bank of Asia

8. Bank of Makati
9 . Country’s Builder Bank
10. Metropolitan Bank and Trust

Company
11. Philippine Savings Bank
12 . Citibank
13 . Union Bank of the Philippines
14. Rizal Commercial Banking

Corporation
15. United Coconut Planters Bank

Exercise 6. ESSAY
Directions: Read each question below and answer it properly. Write your answer on the
spaces provided for.
1. Discuss the meaning of financial system. What is its importance to the nation? (10 pts.)
________________________________________________________________________
_______________________________________________________________________
_
_______________________________________________________________________
_
_______________________________________________________________________
_
_______________________________________________________________________
_
_______________________________________________________________________
_
2. What are the roles of the financial institution, financial instrument and financial market in the
well-being of the country (Philippines)? (10 pts.)
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
RUBRIC for SCORING
INDICATORS NED NED
1. Content Relevance
2. Organization of Thoughts
3. Grammar and Mechanics
Total
Reflection:
In the activity, I have learned

__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
References:
• Capital Markets 1 Edition, Norma Dy Lopez- Mariano, PhD
st
• https://www.slideshare.net/athaullah9/financial-instituations-instrumentsand-markets
• https://www.slideshare.net/MoumitaSen7/financial-instruments-55790403
• http://www.bsp.gov.ph/
Prepared by:
BRIAN S. INCOGNITO
Claveria School of Arts and Trades
Answer Key
Exercise 1.
1. X
2. X
3. X
4. X
5. Y
6. X
7. X
8. X
9. X
10. X
11. Y
12. X
13. X
14. X
15. X

Exercise 2.
Term Means essentially the same as
a. appreciation i
b. supply of foreign currency g
c. law of one price m
d. dirty float k
e. floating exchange rate n
f. devaluation l
g. demand for domestic currency b
h. pegged exchange rate j
i. revaluation a
j. fixed exchange rate h
k. managed float d
l. depreciation f
m. purchasing power parity c
n. flexible exchange rate e
Exercise 3.
1. A 13. B
2. A 14. B
3. A 15. B
4. D
5. B
6. C
7. A
8. A Exercise 5.
9. A
10. C
1. UB
Exercise 4. 2. CB
3. UB
4. CB
5. TB
1. A 6. RB
2. B 7. TB
3. B 8. TB
4. B 9. RB
5. B 10. UB/ CB
6. A 11. TB
7. B 12. UB
8. B 13. UB
9. B 14. UB
10. D 15. UB
11. B Exercise 6: Answers may vary
12. B
Prepared by:
BRIAN S. INCOGNITO
BUSINESS FINANCE
Name of Learner: ___________________________________ Grade Level: __________
Section:___________________________________________ Date: ________________
THE FLOW OF FUNDS AND THE ROLE OF THE FINANCIAL MANAGER

The term ‘Flow of Fund’ refers to the changes in working capital of the movement or
changes of funds. In other words, while a transaction is taking place, any increase or decrease in
funds or working capital is called Flow of Fund. If the funds or working capital increases, it is
treated as the inflow or sources of fund. On the other hand, if the funds or working capital
decreases, it is called the outflow of fund. (www.kullabs.com)

The flow of funds, therefore, denotes the earning and spending of cash or the growth and
reduction of working capital—i.e., fund inflows and outflows. Fund inflows include activities
designed to produce revenues, such as selling products, services, investments, and other
company assets, as well as issuing stocks and bonds. On the other hand, fund outflows include
paying wages, obtaining insurance, purchasing company assets and materials, making long-term
investments, and paying dividends and taxes. At one point, companies gauged their flow of
funds by using any definition of funds and included a financial statement reporting these
activities in their annual reports. (www.referenceforbusiness.com/encyclopedia)
The flow of funds does not occur when a transaction affects fixed assets and fixed
liabilities or current assets and current liabilities. This kind of transaction flow is called no flow
of fund and it occurs only between non-current accounts. Some examples of such transactions
which do not affect the flow of funds or which are not recorded in the fund’s flow statement are:
Collection from debtors or payment to creditors, purchase or sales on inventory in cash or
credit, purchase or sales of marketable securities, exchange of fixed assets, purchase of fixed
assets by issue of shares, conversion of debentures into shares, etc. (www.kullabs.com)
In addition, when we have the comparison between cash flow and fund flow, cash flow
refers to the current format for reporting the inflows and outflows of cash, while funds flow
refers to an outmoded format for reporting a subset of the same information. Cash flow is
derived from the statement of cash flows. (https://www.accountingtools.com/)
Moreover, a cash flow statement shows the inflows and outflows of cash and cash
equivalents. Cash includes cash in hand and demand deposits with the banks while cash
equivalents are highly liquid investments, i.e. they can be readily converted into cash like
marketable securities, commercial papers, and short-term government bonds. It explains the
changes in the cash in hand and cash at bank at the beginning and the end of the accounting
period.
THE ROLE OF THE FINANCIAL MANAGER
Financial managers perform data analysis and advise senior managers on

profitmaximizing ideas. Financial managers are responsible for the financial health of an

organization. They produce financial reports, direct investment activities, and develop strategies
and plans for the long-term financial goals of their organization.
The role of the financial manager, particularly in business is changing in response to
technological advances that have significantly reduced the amount of time it takes to produce
financial reports. Financial managers’ main responsibility used to be monitoring a company’s
finances, but they now do more data analysis and advise senior managers on ideas to maximize
profits. They often work on teams, acting as business advisors to top executives.
As to skills, financial managers need to show evidence of commercial and business
awareness, high numeracy and sound technical skills, problem-solving skills and initiative,
negotiation skills and the ability to influence others and strong attention to detail and an
investigative nature.
The roles of financial managers can vary enormously. In larger companies for instance,
the role is more concerned with strategic analysis, while in smaller organizations, a financial
manager may be responsible for the collection and preparation of accounts. In general, tasks
across roles may include:
Providing and interpreting financial information- Knowing how to work with the
numbers in a company's financial statements is an essential role for financial manager.
The meaningful interpretation and analysis of balance sheets, income statements, and
cash flow statements to discern a company's investment qualities is the basis for smart
investment choices.
Formulating strategic and long-term business plans- A strategic plan with key long-
term objectives serves as a framework for making decisions and provides a basis for
planning. Putting together a strategic plan can provide the insight needed to keep a
company on track by setting goals and measuring accomplishments. By analyzing the
information in the long-term plan, executives can make necessary changes and set the
stage for further planning.
Developing financial management mechanisms that minimize financial risk- Business
establishments routinely face different types of risks in the course of their operations.
Risk stems from uncertainty of financial loss and can potentially cripple the business if
not managed in time. This demands that mechanisms to manage risk be created via a risk
management philosophy, with the objective of minimizing negative effects risks can have
on the financial health of the institution. In this way financial manager’s role involves
identifying potential risks in advance, analyzing them and taking steps to diminish or
eliminate them.
Managing financial accounting, monitoring; reporting systems and producing
accurate financial reports to specific deadlines; and liaising with auditors to ensure
annual monitoring is carried out - Accountability is a key feature of the financial
systems. The budget is the financial plan for the year and it is essential for the financial
manager to monitor actual progress against this plan to ensure that the desired fiscal
result will be achieved. The monthly reports are the main tool of financial control
enabling cost centers to monitor income and expenditure against budget.
Keeping abreast of changes in financial regulations and legislation- New laws,
regulations and public expectations have pushed governance and compliance even
higher up the boardroom agenda. Financial managers everywhere recognize it’s

essential to make sure their companies have effective, robust and reliable governance
and financial compliance tools.
Learning Competency:
Explain the flow of funds within an organization – through and from the enterprise—and the role
of the financial manager, (ABM_BF12-IIIa-5)- Quarter 1, Week 1& 2
Exercise 1. SENTENCE ANALYSIS

Directions: Read each of the following statements differentiating FUND FLOW and CASH
FLOW and identify whether it is:
A-Both statements are TRUE C- 1st statement is TRUE; 2nd statement is FALSE
B- Both statements are FALSE D- 1st statement is FALSE; 2nd statement is TRUE Write
the letter of your answer on the space provided before each item. Please use Capital letters.
_____1. (a) A statement that shows the changes in the cash and bank balance between opening
and closing dates is known as a cash flow statement; while (b) a statement that shows the
variations in the financial position between the two financial years is known as a fund flow
statement.
_____2. (a) Fund Flow Statement examines the firm’s efficiency in utilizing the working capital.
(b) Conversely, Cash Flow Statement analyses the cash generating efficiency of the entity.
_____3. (a) Cash Flow statement is a part of Financial Statement. (b) Fund Flow Statement is
part of the Balance Sheet.
_____4. (a) Fund Flow Statement is helpful to a long-term analysis of financial planning; (b)
while Cash Flow statement is useful for a short term financial analysis of cash planning.
_____5. (a) Cash flow statement contains opening and closing balances of cash and cash
equivalents. (b) On the contrary, fund flow statement does not contains opening and closing
balances of cash and cash equivalents.
_____6. (a) Fund Flow statement uses non- cash basis of accounting. (b) On the contrary, Cash
Flow statement uses the Accrual Basis of Accounting.
_____7. (a) Fund Flow Statement shows the sources and application of funds, (b) but Cash Flow
statement shows the inflows and outflows of cash.
_____8. (a) A fund flow statement is a statement showing the changes in the financial position of
the entity in the current accounting year. (b) A cash flow statement is a statement showing the
inflows and outflows of cash and cash equivalents over a period.
_____9. (a) Fund flow statement is prepared to show the reasons for the changes in the financial
position, with respect to previous year and current accounting year. (b) Cash Flow statement is
prepared to show the reasons for movements in the cash at the beginning and at the end of the
accounting period.
_____10. (a) Cash flow refers to the current format for reporting the inflows and outflows of cash,
(b) while funds flow refers to an outmoded format for reporting a subset of the same information.

Exercise 2.
Directions: Read the following ACTIVITIES and identify whether it is INFLOW, OUTFLOW or
NO FLOW type of transaction. Write your answer on the space provided for.
ANSWERS ACTIVITIES
1 . Interest received from making loans
2 . Payments to acquire inventory
3 . Conversion of debentures into shares
4 . Payments to lenders and other creditors for interest
5 . Sale of property, plant, and equipment
6 .Cash paid purchase available-for-sale and held-to-maturity securities
7 . Purchased of fixed assets by issue of shares
8 . Cash paid to make long-term loans to others.
9 . Payments of cash dividends or other distributions to owners
10 . Repayments of amounts borrowed.
11 . Purchase or sales of marketable securities
12 . Cash received from issuing capital stock and bonds,
13. Cash received from mortgages, and notes, and from other short- or
longterm b orrowing.
14 . Payment of taxes.
15. Payments of Registration Fee at the Securities and Exchange Commission.
Exercise 3.
Directions: Formulate JOB SPECIFICATIONS (what are the qualities and
qualifications of a Financial Manager you are looking for) and JOB DESCRIPTIONS (duties you
want the Financial Manager to perform.) Please use the format below for your
answers:

FINANCIAL MANAGER
Example: Example:
Holder of NC3 in In- charge in the overall financial matters of the comp
Bookkeeping any.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Note: May opt to change the number of items depending on the teacher’s
decision. Checking/ scoring will be prerogative of the teacher. (Matching of answers on
the required/ directions)
Exercise 4.
Directions: Find out the terms relating to ‘The Flow of Funds and the Role of the Financial Manager
by analyzing the pictures given. Write your answer in the boxes provided for.

N E O S
1 2
A G A E
A I I S
5 6

E R E U S

A E E E
9 10
Source: www.dailypuzzlecheats.com
Exercise 5.
Directions: Complete the illustration below about the ‘flow of funds’. Choose your answers
from the box below.
5)
3)
2)

4)
1)
www.thebalancesmb.com
TAXES BUILDING BUSINESS
MONEY WAGES RENT
PAYMENT INCOME COINS
CONSUMER
Reflection:
What I have learned in this activity

_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________
References:
• Business Finance Teachers Guide
• (https://www.suomenpankki.fi/en/financial-stability/the-financial-system-in-brief)
• (www.kullabs.com)
• (keydifferences.com)
• (https://www.accountingtools.com/)
• dryrun.com
• https://www.thebalancesmb.com/cash-flow-how-it-works-to-keep-your-businessafloat-398180

Prepared by:
BRIAN S. INCOGNITO
Writer
7. A
8. D
9. A
10. A
Exercise 2:
1. Inflow
2. Outflow
3. No flow
4. Outflow
5. Inflow
6. Outflow
7. No flow
8. Outflow
9. Outflow
10. Outflow
11. No flow
12. Inflow
13. Inflow
14. Outflow
15. Outflow
Answer Key
Exercise 3. (Answers may vary)
Exercise #1
1. A Expected Answers:
2. A JOB SPECIFICATIONS:
3. C • A graduate of BS Accountancy or any
4. A business-related courses
5. A • Must be a Certified
6. B Public

Accountant or Certified Financial 6. BUSINESS
Analyst 7. PERFORMANCE
JOB DESCRITIONS: 8. FUNDS
9. FINANCE
• Prepare financial statements, business 10. INCREASE
activity reports, and forecasts
• Monitor financial details to ensure
that legal requirements are met.
Exercise 5.
Exercise 4. 1. CONSUMER
2. BUSINESS
3. RENT
1. INCOME 4. TAXES
2. PROJECTIONS 5. WAGES
3. SAVINGS
4. PAYMENT
5. PLANNING
Prepared by:
BRIAN S. INCOGNITO
Claveria School of Arts and Trades Writer

Business Finance Week 1 & 2

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12

LEARNING ACTIVITY SHEETS

Regional Office No. 02 (Cagayan Valley)DEPARTMENT OF EDUCATION

Regional Government Center, Carig Sur, Tuguegarao City, 3500

Note: Practice Personal Hygiene Protocols at all times .

Printed by: DepEd Regional Office No. 02

Note: Practice Personal Hygiene Protocols at all times .

Explain the major role of financial management ..................... 1

and the different individuals involved

Distinguish a financial institution from financial ..................... 10

instrument and financial market

Explain the flow of funds within an organization- ..................... 23

through and from the enterprise - and the role of

Identify the steps in the financial planning ..................... 33

Illustrate the formula and format for the ..................... 39

preparation of budgets and projected financial

Explain tools in managing cash, receivables, ..................... 48

Compare and contrast the loan requirements of ..................... 56

the different bank and nonbank institutions and

cite these institutions in the locality

Calculate future value and present value of ...................... 68

Compute loan amortization using mathematical .................... 77

concepts and the present value tables

Apply mathematical concepts and tools in ..................... 84

computing for finance and investment problems

Explain the risk-return trade-off ...................... 94

Note: Practice Personal Hygiene Protocols at all times .

LEARNING ACTIVITY SHEET

ROLES OF FINANCIAL MANAGEMENT AND THE DIFFERENT

Background Information for Learners

Roles of Financial Management

a. Financial decisions and controls: Financial management and financial managers

Note: Practice Personal Hygiene Protocols at all times . 1

The goal of financial management is to maximize the value of shares of stocks.

Note: Practice Personal Hygiene Protocols at all times . 2

Note: Practice Personal Hygiene Protocols at all times . 3

Quote Number Your Insights

Note: Practice Personal Hygiene Protocols at all times . 4

Exercise 3. Directions: Develop an organization structure of your chosen business. Make a

VP FOR VP FOR VP FOR VP FOR

Exercise 4. Directions: Complete the given statement in each item by writing A if it is

______1. The shareholder in a corporation is considered as ______.

Note: Practice Personal Hygiene Protocols at all times . 5

Note: Practice Personal Hygiene Protocols at all times . 6

Note: Practice Personal Hygiene Protocols at all times . 7

Rubric for Scoring Exercises 1 and 5

Note: Practice Personal Hygiene Protocols at all times . 8

Note: Practice Personal Hygiene Protocols at all times . 9

What I have learned in this activity:

• Department of Education Business Finance Teaching Guide

ABEMAILA L. DELA CRUZ

Note: Practice Personal Hygiene Protocols at all times . 10

ABEMAILA L. DELA CRUZ

Note: Practice Personal Hygiene Protocols at all times . 11

LEARNING ACTIVITY SHEET

FINANCIAL INSTITUTION, FINANCIAL INSTRUMENT AND

Background Information for Learners

Financial institutions/ intermediaries are organizations that perform certain financial

Some of the major categories of financial institutions are Commercial Banks,

TYPES OF FINANCIAL INSTRUMENTS:

Note: Practice Personal Hygiene Protocols at all times . 12

(Mariano, N.L. (2017) Capital Markets. Rex Book Store)

Now, try this!

1. The shareholder in a corporation is considered as .