hey guys therefore welcomed derek business class in this video i’m gonna make a short introduced by business handling the first issue is what is finance finance can be defined as the arts and discipline of managing money artwork is like dancing singing proceed something which is based on feeling but science is more about facts and illustrations “youve got to” do experimentation come out with thoughts to clarify what you believe so finance is basically a mix of art and science of organizing coin the key word here is controlling money finance is all about overseeing coin that’s what we label monetary handling monetary control is a very important aspect for companies it’s because financial handling is about maintenance and creation of economic value or money what is wealth let’s take an example let’s say the market value of fellowship a is 100 billion dollars investors of companionship a all together endowed thirty billion dollars so taking 100 billion dollars minus 30 million dollars you will get seventy billion dollars this amount of money is something we call prosperity created for investors shareholders only paid thirty million dollars to buy the shares but the company caused additional seventy billion dollars for the shareholders of course this is gonna be a good sign for investors as the ethic of the company has increased for finance it has two broad topics personal finance and corporate finance personal finances about how people organize their own coin it would refute the issues to such as how much they spend how much they save and how they expend their savings this is more for individual financial planning but for corporate finance this is all about how to manage company’s money it would refute the issues to such as how conglomerates raise money from investors how houses vest fund to earn a profit whether the government has reinvest gains in the business or distribute them back to investors for the following classes my focus is likely to be on corporate finance which is about how to manage fellowships money you may ask a question if you are studying finance what occupancy can you choose after you grad alright for occupation opportunities you may work in banking manufacture help people do personal financial planning or investments become a real estate or quality negotiator or probably an insurance agent another question that parties may be requested is is finance the same as accounting the reaction is likely to be yes and no yes because some functions of finance and accounting are closely related and overlapping no because they have some differences finance beings are mostly treasurer’s whilst accounting beings are controllers finance parties always focus on how to vest how to meet more fund for the firm they are just like the accelerator of a gondola to make a car move you have to press on the accelerator the harder you press the faster the car can move but at the same day you need to have a break this is the function of accounting which we call them controllers when finance people are moving too fast investing more much fund in too many projects accounting parties the damper will retard them down for safety purpose in smaller conglomerates the financial manager generally performs both performs merely in big business we will have two separate finance and accounting bureaux one other thing about finance is the fact that it is working with cash flows the main points of Finance is on how to manage cash but accounting exercises accrual procedure in which accounting concentrates on originating proper records for transactions let’s take an example company a experienced the following activity last-place year firm marketings was $100,000 with one vehicle sold but customer has not started the fee that’s why it is 100 percentage still uncollected the cost of the car is $80,000 the corporation has already paid and full extent under supplier expressions if you were to prepare an income proclamation under accounting record which is the accrual approach you would recognize a sales of $100,000 costs of $80,000 so the company made a profit of $20,000 but under finance record which is the currency procedure since you had not received cash from the client you would recognize a sales of$ 0 but “youve already” paid the supplier so there would be a cost of $80,000 eventually the company made a net loss of $ 80,000 for selling the car this example is to show us the difference between accounting and finance records next persona we are gonna talk about the purpose of a house it is about what target a firm wants to achieve the firstly one benefit maximization revenue maximization refers to how much dollar benefit the busines prepares how to stir “the worlds largest” advantages from the business some companionships may choose to increase the current revenues by reducing the investigations and proliferation spendings such method is a short term approach mainly concerned about short-term benefits only if firm chips the budgetary resources for R& D it may not be able to come out with new commodities eventually the company cannot survive in the long run another problem with benefit maximization is that it rejects the timing of returns magnitude of returns and risk when you are able to receive the money how much money you will receive and how much is the risk these questions are not reacted if companionships exclusively focus on profits third fulfilling objective of earning benefit are no longer able help in creating prosperity in the long run profit should not be the only target of a company rather firms should look at how to create property rich signifies importance in fact business should focus more on composing quality for the company lastly it does not consider the social responsibility if the goal of a company is just to constitute benefit there is an opportunity not make donation it may not be concerned about airborne pollutants but nowadays social responsibility is very important for fellowship to survive in the long run another objective of a conglomerate is about stockholder affluence maximization it focuses on maximizing the value of a corporation when we say the value of a company it symbolizes the value of the stock or share so it is a long-term approach mostly subjects of concern the best interests of the financial assets financial assets includes ligaments shares and so on next it considers the timing of returns magnitude of returns and risk it will refute the following point like when you will receive the money how much fund you will receive and how much is the risk these are the important criteria of doing a business how to increase the value of a company for lessons corporation may invest in new projects corporation may think of how to improve the quality of produces not to cut the cost but to control the cost by improving the product process probably the age-old channel of product is to do 10 steps to manufacture product but if you can come out with a better behavior of yield increase the process to 5 paces merely you can control the cost some business like uber grab gondola first they were selling their concoctions without making a profit some companionships may even sell their produces at a loss in order to gain the market share think about Google Gmail how can we use their service free of charge because the company aims at creating quality for the company that’s why the share rate of Google is so expensive in short stockholder resource entails the share expenditure or the firm’s cost maximizing shareholder property necessitates maximizing the share rate and also maximizing the firm’s quality in fact some companies focus on advantage whilst some firms concentrates on price profit versus evaluate which one is more important to corporation well profit is a subset of value which meant that profit is only a small constituent of value as indicated in the graph under value we have profit quality labelling the shares R& D and culture of busines these are the factors that contribute to the value of a company that’s why benefit is not everything profit is just a small part of the cost in other words appointing significance will help create profit but realise earning is not necessarily create cost for a company another aim of a firm is a stakeholder scene stakeholders include all categories of individuals who have a direct fiscal link to the firm such as employees patrons suppliers creditors society environment and so on companies should not only take care of the stockholders but also the other members of the process of clearing benefit firms should shun wars that could harm the the rights and interests of its stakeholders taking care of the stakeholders is not to maximize but to preserve stakeholder well-being for example bequeath money to the community to build class or infirmaries to prevent pollution of environment to make care of the employees these are some examples of taking care of stakeholders such a view is considered to be socially responsible we usually call this as corporate social responsibility CSR more and more firms are contributing in csr which they believe that CSR would improve the financial performance of the company alright that’s all for this video thanks for watching told you in the next one bye-bye[ Music]
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