Business Finance Module 1: Understanding Finance | Overview | Grade 12

Summary

This educational video script covers Module 1 and 2 of Business Finance, focusing on the foundational concepts and practical applications. Module 1 introduces finance as a blend of science and art, emphasizing the dynamic nature of financial practices adapting to business environments. It delves into the interplay between economics, accounting, and finance, highlighting the importance of efficient resource allocation and decision-making. The module also outlines the areas of finance, distinguishing between private and public finance, with a spotlight on personal and business finance. Module 2 transitions into financial institutions, instruments, and markets, setting the stage for deeper exploration in subsequent lessons.

Takeaways

• 📚 The video discusses Module 1 and Module 2 of Business Finance, covering topics from the first week of the semester.
• 💡 Finance is defined as the science and art of applying economic and accounting concepts to manage financial resources.
• 🌐 Economic concepts in finance focus on the efficient use of resources, while accounting is seen as the language of business and finance, dealing with daily transactions and financial statements.
• 🔍 Finance is dynamic and adapts to changes in the business environment, influenced by customer needs and market conditions.
• 📈 Accounting emphasizes accuracy and the preparation of financial statements, whereas finance is more focused on decision-making and planning for the future.
• 🏦 The areas of finance include private finance (personal and business finance) and public finance, with the video focusing on business finance.
• 📊 Business finance encompasses financial management, capital markets, and financial investments, which will be discussed in subsequent modules.
• 👔 In a business organization, finance is a functional area that may include departments like accounting, treasury, and finance officer roles.
• 🏢 The organizational structure can vary, with some companies having separate divisions for finance and operations, each with its own set of responsibilities.
• 📈 The video concludes with a transition to Module 2, which will delve into financial institutions, instruments, and markets.

Q & A

What is the definition of finance according to the video?

Finance is described as both a science and an art of the correct application of economic and accounting concepts, principles that define the system, structure, process, management, allocation, and station of financial resources, investment, and expenditure.

How does the business environment affect financial practices?

The business environment is constantly changing due to customer needs and wants. Financial resources and practices must adapt to these changes to remain effective.

What is the relationship between finance and economics?

Finance was traditionally considered an integral part of economics. Economics is concerned with the efficient utilization of scarce resources, and finance applies this concept to utilize the resources within an organization.

Why is accounting referred to as the language of business and finance?

Accounting is referred to as the language of business and finance because it involves the recording of day-to-day transactions and the preparation of financial statements, which provide a clear picture of the flow of money within an organization.

What is the difference between accounting and finance as per the video?

Accounting focuses on the accuracy of financial statements such as balance sheets, while finance focuses on qualitative aspects and decision-making based on actual financial statement data.

What are the main areas of finance discussed in the video?

The main areas of finance discussed are private finance and public finance. Private finance includes personal finance and business finance, while public finance deals with government income, expenditures, and taxation.

What is the focus of business finance according to the video?

Business finance focuses on managing the financial resources of a business organization, including financial management, capital market, and financial investment.

What are the three subcategories of business finance mentioned in the video?

The three subcategories of business finance mentioned are financial management, capital market, and financial investment.

What roles are typically found under the vice president for finance in a business organization?

Under the vice president for finance, there are typically the accounting department, led by the chief accountant, and the finance and treasury department, which includes the finance officer.

How can the structure of a business organization affect its finance division?

The structure of a business organization can vary, with some having a functional division with a vice president for finance overseeing accounting and treasury, while others may have a simpler structure with just an operating division and a finance division.

What is the significance of the different individuals involved in a business organization as it relates to finance?

Different individuals in a business organization, such as the board of directors, CEO, and vice presidents, play crucial roles in decision-making and management of financial resources, which directly impacts the financial health and strategy of the organization.

Outlines

00:00

📚 Introduction to Business Finance

This paragraph introduces the first module of Business Finance, covering topics from the first week of the semester. It discusses the definition of finance, which is described as both a science and an art, focusing on the application of economic and accounting concepts to manage financial resources. The speaker emphasizes the dynamic nature of financial practices, which adapt to changes in the business environment, influenced by customer needs and marketing principles. The paragraph also touches on the relationship between finance, economics, and accounting, highlighting how finance is an integral part of economics, dealing with the efficient use of resources, and how accounting serves as the language of business, focusing on daily transactions and financial statement preparation.

05:00

🏦 Exploring Areas of Finance and Its Functions

The second paragraph delves into the areas of finance, distinguishing between private and public finance. The focus is on private finance, which includes personal finance and business finance. Business finance is further broken down into financial management, capital markets, and financial investment. Financial management involves capital budgeting and investment decisions, capital markets study financial institutions and their roles, and financial investment covers decisions related to stocks, bonds, and investor behavior. The paragraph also discusses the organizational structure of businesses, particularly the functional areas involved in finance, such as the vice president for finance, accounting department, and treasury department. It mentions that organizational structures can vary, with some having separate operating and finance divisions.

10:00

🏢 Organizational Structure and Finance

The third paragraph continues the discussion on the organizational structure of businesses, particularly focusing on the finance division. It mentions that in larger companies, there might be a vice president for finance who oversees various departments such as accounting and treasury. The paragraph also acknowledges that some organizations may have a simpler structure with just an operating division and a finance division. The finance division typically includes accounting and treasury functions. The paragraph concludes the discussion on understanding finance in module one and transitions to module two, which will cover financial institutions, instruments, and markets.

Keywords

💡Finance

Finance, as discussed in the video, is described as both a science and an art. It involves the application of economic and accounting concepts to manage financial resources, investments, and expenditures within an organization. It is crucial for the efficient allocation of resources and is dynamic, adapting to changes in the business environment. The video emphasizes that finance is not static but evolves with the needs of customers and market conditions, which is a central theme of the discussion.

💡Economic Concepts

Economic concepts are integral to finance as they deal with the efficient utilization of scarce resources. The video mentions that finance uses economic principles to manage the resources within an organization, including human and financial capital. This is exemplified when the instructor discusses the role of finance in ensuring that resources are used effectively to meet organizational goals.

💡Accounting

Accounting is referred to as the language of business and finance. It involves recording daily transactions and preparing financial statements, which are essential for tracking the flow of money within an organization. The video highlights the distinction between accounting and finance, noting that while accounting focuses on accuracy and the preparation of financial statements, finance is more concerned with analyzing these statements and making decisions based on them.

💡Financial Management

Financial management is a key area under business finance that the video discusses. It involves making capital budgeting and investment decisions, which are critical for the financial health and growth of a business. The video suggests that financial management is a core component of the finance function within an organization, emphasizing its importance in strategic planning and decision-making.

💡Capital Market

The capital market is mentioned as a part of business finance that studies different financial institutions and their functions. It is where long-term funds are raised by issuing securities like stocks and bonds. The video implies that understanding the capital market is essential for businesses to access the necessary funds for expansion and operations.

💡Financial Investment

Financial investment is another area of focus within business finance. It involves making decisions about the value and price of stocks, bonds, and other securities, as well as understanding the behavior of investors. The video suggests that this knowledge is vital for businesses to make informed investment choices that can lead to financial growth.

💡Business Environment

The business environment is described as constantly changing, and finance must adapt to these changes to meet customer needs. The video emphasizes that the dynamic nature of the business environment influences financial practices, requiring finance professionals to be flexible and responsive to market shifts.

💡Personal Finance

Personal finance is a subcategory of private finance discussed in the video. It focuses on the management of an individual's financial resources. The video mentions that even as students, individuals are already practicing personal finance, which is a foundational skill for managing one's own economic well-being.

💡Public Finance

Public finance, as touched upon in the video, deals with the allocation of government income from taxation or borrowings and is also known as fiscal administration. It is contrasted with private finance, highlighting the different contexts in which financial principles are applied.

💡Organizational Structure

The video discusses the organizational structure within which finance operates, mentioning functional areas such as finance, operations, administration, and marketing. It explains how the finance division, often led by a vice president for finance, includes departments like accounting and treasury, which are crucial for managing the financial aspects of a business.

💡Financial Institutions

Financial institutions are briefly mentioned in the video as part of the module 2 discussion. These institutions play a critical role in the economy by providing financial services and facilitating transactions. The video suggests that understanding the functions of these institutions is important for the overall study of business finance.

Highlights

Introduction to Module 1 and Module 2 of Business Finance.

Definition of finance as a science and art of applying economic and accounting concepts.

Finance's role in managing the allocation of financial resources and investment.

Adaptability of financial practices to changes in the business environment.

Finance's connection to economics and the efficient use of resources.

Accounting as the language of business and its relation to finance.

Distinction between accounting's focus on accuracy and finance's focus on decision-making.

Division of finance into private and public finance, with a focus on private finance.

Personal finance as a subcategory of private finance.

Business finance's focus on managing financial resources of a business organization.

Financial management's emphasis on capital budgeting and investment decisions.

Capital market's study of financial institutions and their functions.

Financial investment's focus on the value and price of stocks and bonds.

Finance's status as a functional area within a business organization.

Organizational structure variations in business, including finance and accounting departments.

Transition to Module 2, focusing on financial institutions, instruments, and markets.

Transcripts

okay hello my baby loves

so this video we're going to talk about

the module 1 and module 2 of

business finance which i

gave last week okay so

first week of this semester

okay so let's see first the module one

so this is the module one of business

finance

so this is the soft copy of

your module okay so the lesson

under module one are

okay so we have okay

so we have the definition of finance

areas of finance

and for lesson three different

individuals involved in

business organization okay so let's

start with the

definition of finance um

you already have your module with you at

home so i'm not

gonna read every details of this so i'm

just gonna explain

or i'm gonna give insights to

you so pretty you know since i know

like and i believe

even again i mean okay so definition of

finance

finance is both science and art of

correct application

of the economic and accounting concepts

principles that define the system

structure process

management allocation to the station of

financial resources investment and

expenditure

between young

the use of factual information this

factual information

so financial practices do not remain

static but become adaptive

to the changes in the business

environment uh

based on your organization and

management i believe

and also in the marketing principles of

marketing

which is you are also currently taking

this semester the business environment

is constantly changing

because we always adapt to

whatever our customer needs and whatever

they want

so with that

financial resources and practices

would you change the nation again

okay economic and accounting concept

okay let's start with economics

so finance used to be considered as an

integral

part of economics so economics is

concerned with

an efficient utilization of scarce

resources and also finance

finance we also use

that to uh utilize every sources that we

have

inside the organization so you you also

have your human capital

your financial capital so efficient

utilization

nina gaming nothing don't see finance

okay

and lastly so accounting

considered as the language of both

business and finance

so maybe

just maybe some of you

are hunting finance on subject

so so accounting

is a day-to-day transaction

on the preparation of financial

statements so flow of your money

so you see accounting see finance

focuses on management of your assets and

liabilities

financial resources no you know human

capital nino

so you nominate finance

and finance also plans for the future of

the company

so art

so constantly changing

environment

accounting prefer prepares a financial

statement

c finance analyzes financial statements

hi also see accounting then

um focuses on accuracy

correct you have your balance sheet

accuracy

however finance focuses on

qualitative focuses on this decision

making

based on your actual rate financial

statement

data negating accounting

okay so let's go now to the next lesson

so you have the areas of finance

so i have here a note although there is

no universally accepted standard

regarding to the division of finance

areas so

this one is just

a suggested division

of general perspective in this

field okay so you have here the finance

you have private finance and public

finance so

we are just going to focus on this part

so the private finance

so under private finance we have

personal finance and business finance so

our subject focuses on this one so at

futile

by business finance so financial

management capital market financial

investment

so my reference is uh

the last part of this module

okay

so first the broad top broad

field the private and public finance so

private finance

financial resources of private

individuals private organizations

ngos in accordance to the prescribed

financial policies

okay so this one the time under c

business finance

you also have the public finance uh

allocation of government income

generates from either taxation or

borrowings

so hindi times

uh deals with the government

expenditures and taxations

so public finance is also called as

fiscal administration

okay so under private finance you have

personal finance

subcategory of private finance this

which is directed towards the management

of personal resources of an individual

so in the first activity i believe you

already practiced this one even though

you are just student

and maybe especially

because

okay next one would be the business

finance so

i think subject

focuses on handling and managing the

financial resources of

a business organization so under this

one you have

this tree uh we are going to discuss

this in

the following modules cinnamon so as a

preview financial management

focuses on capital budgeting decision or

investment decision

capital market studies different

financial institutions

and their functions i i think

uh by module two or three

financial institutions and lastly would

be the financial investment

includes business decision about the

value and price of stocks bonds

and behavior of investors

and let's go now to the last lesson

in module one so you have the different

individuals involved

so first in business organization

finance has elevated its status as

one functional area so in a typical

arrangement of a business organization

four functional divisions are involved

so

pinup in big companies

okay so this a functional area and i

think you already discussed

this in your organization and management

so in functional area

every function

vice president okay so from the board of

directors

ceo or president then the

uh vice president so you have vice

president for operation for

administration

uh vice president for finance and for

marketing

so we are gonna talk in this

sport kbp for finance so under

vice president for finance praise

or division also so you have the

accounting department so you have the

chief accountant and

the finance and treasury department

or your finance officer

okay so other than functional division

other than this one

you also have uh

it is also possible that an organization

follows

a structure of just two major divisions

so under the president

so this one you have an operating

division in

the finance division okay so

under operating so you have your

production the human

resources the marketing and in finance

you have your accounting and treasury

okay so it could also be

finance in accounting so uh

in every organization they practice a

different

organizational structure which is

applicable

to them and that

ends the discussion

for understanding finance in module one

of your salt learning kit

so at this point i believe that you

already

did every activities after the

discussion

so if you don't understand something

so with that let's go now to the module

2

of business finance which is the

financial institutions

instruments and markets