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MNB1501
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Lecture notes of 12 pages for the course MNB 1501-Business Management 1A at Unisa (ALL NEEDED INFO)
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Learning Unit 7The financial function and financial management
INTRODUCTION AND AIM OF THE UNIT
In this learning unit we will first look at the importance of financial management and
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introduce the basic financial management concepts. Thereafter, we will discuss the objec-
tive and fundamental principles of financial management. The concept of present and
future value as core elements of the time value of money will also be discussed. Lastly,
we will discuss the concepts of financial analysis, planning and control.
79STUDY CHAPTER 14 (section 14.1 – 14.7) IN ITBM
Contents of this learning unit
−− The financial function and financial management
−− Concepts in financial management
−− Objective and fundamental principles of financial management
−− Cost-volume-profit relationships
−− The time value of money
−− Financial analysis, planning and control
80 Learning objectives
After completing this topic, you should be able to
yy discuss the financial function and financial management
yy explain concepts in financial management
yy identify objectives and fundamental principles of financial management
yy calculate cost-volume-profit relationships
yy calculate present value and future value
yy calculate and interpret certain financial ratios
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KEY TERMS
capital shareholder wealth
assets liabilities
fixed costs variable costs
break even present value
financial ratios budgets
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, MNB1601/001/4/2017
Refer to the end of chapter 14 in the prescribed book to familiarise yourself with the key
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terms for this learning unit before continuing.
7.1 THE FINANCIAL FUNCTION AND FINANCIAL
MANAGEMENT
81 Study section 14.2 in ITBM
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All businesses need funds. In financial management terms, the word “capital” refers to
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funds invested in the enterprise. These funds are needed to pay for the required assets,
resources and labour.
The primary objective of the enterprise is often summarised as creating wealth for the
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stakeholders. The word “stakeholder” refers not only to the owners and/or the shareholders
of a business enterprise, but also to the investors of loan capital and, more importantly,
the employees of the enterprise.
Check this out and then join the online discussion in Discussion Forum 5 (dis-
82
cussion 1) about financial management!
A day in the life of a finance manager at eBay:
https://www.youtube.com/watch?v=YRDE3x0aQMc
Activity 7.1
Identify the three important tasks that financial managers must perform in order to carry
out their duties effectively.
83 Feedback:
Check in on your e-tutor's discussion forum to discuss your answer with your fellow students
and your e-tutor.
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