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Instructional Planning

(The process of systematically planning, developing, evaluating and managing the instructional process by using
principles of teaching and learning - D.O. 42, s. 2016)
Detailed Lesson Plan (DLP) Format

School Bangcud National High School Grade Level 12


Teacher Emily T. Dela Torre Learning Area Business Finance
Duration 60 minutes Quarter 3rd Quarter, 2nd Sem

I. OBJECTIVES
A. Content Standards The learners demonstrate an understanding of the definition of
finance, the activities of financial manager, and financial institutions
and markets.
B. Performance The learners are able to:
Standards • Describe who are responsible for financial management within an
organization.
• Describe the primary activities of the financial manager.
• Describe how the financial manager helps in achieving the goal of
the organization.
C. Learning The learners shall be able to:
Competencies / • Explain the major role of financial management and the different
Objectives. individuals involved. (ABM_BF12-IIIa-1)
Write the LC code for • Explain the flow of funds within an organization – through and
each from the enterprise—and the role of the financial manager.
(ABM_BF12-IIIa-5)

Specific Learning Outcomes


At the end of this lesson, the learners will be able to:
• Understand the key positions in a corporate organization and identify the
roles of each.
• Identify the primary activities of the financial manager.

II. CONTENT Introduction to Financial Management


III. LEARNING
RESOURCES
A. References
1. Teacher’s Guide pages Pages 10-18
2. Learner’s Materials
pages
3. Textbook (1) Cayanan, A. & Borja (forthcoming). Business Finance. Quezon
City. Rex Bookstore.
(2) Gitman, L. J. & Zutter C. J. (2012), Principles of Managerial
Finance (13th Ed), USA: Prentice-Hall
4. Additional Materials
from Learning Resource
(LR) portal
B. Other Learning
Resources
V. PROCEDURES 7E’s
A. Reviewing previous . Message from the CFOs (5 Minutes)
lesson or presenting the • Share the following quotes from the Chief Financial Officers (CFOs)
new lesson (MOTIVATION of the respective corporations:
QUESTION) - Unilever: “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 (Unilever)

- Jollibee: “It’s very exciting because you are not just thinking of
today but what the company will need in the future” - Ysmael V.
Baysa (Morales, 2013)

- Globe Telecom: “Yesterday’s solutions are never adequate for the


future” - Albert De Larrazabal (Klobucher, 2015)

- SM Corporation: “Now, we don’t go out because we need funds.


We go out because it’s an opportunity.” – Jose T. Sio (Montealegre,
2015)

• Reflect on the quotes cited and mention how critical and dynamic
working in the finance field is.
B. Establishing a purpose PPT Presentation of OBJECTIVES:
for the lesson At the end of this lesson, the learners will be able to:
• Understand the key positions in a corporate organization and
identify the roles of each.
• Identify the primary activities of the financial manager.
C. Presenting examples/ Discussion of Homework (5 mins)
instances of the new • Begin by asking at least five learners to share in class the result of
lesson their interview with a Chief Financial Officer (CFO) or Vice-President
for Finance.

• Write on the board the roles and functions that the students
identified from their interview.
• Take note of functions that are not roles of a Financial Manager
but are roles of other managerial positions.
• Discuss that these functions are done by people in the company
who are holding other managerial positions. A Financial Manager is
part of a management team whose ultimate goal is to maximize
shareholders wealth.

The Corporate organization Structure (20 mins)


• Illustrate the corporate organization structure and inform them
that this particular set of people each play a role in the decision
making of the company.

From the diagram presented, emphasize that each line is working


for the interest of the person on the line above them. Since the
managers of the company are making decisions for the interest of
the board of directors and the board of directors does the same for
the interest of the shareholders, it follows that the goal of each
individual in a corporate organization should have an objective of
shareholders’ wealth maximization.
Teacher Tips: The various types of functions are expected if the
person they interviewed is a small business owner who makes
decisions on various aspects of the business.

D. Discussing new PPT Presentation:


concepts and practicing
new skills #1 • Discuss
•Shareholders: The shareholders elect the Board of Directors (BOD).
Each share held is equal to one voting right. Since the BOD is elected
by the shareholders, their responsibility is to carry out the objectives
of the shareholders otherwise, they would not have been elected in
that position. Ask the learners again what the objective of the
shareholders is just to refresh.
•Board of Directors: The board of directors is the highest policy
making body in a corporation. The board’s primary responsibility is
to ensure that the corporation is operating to serve the best interest
of the stockholders. The following are among 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 (Cayanan, 2015)

•President (Chief Executive Officer): The roles of a president in a


corporation may vary from one company to another. Among the
responsibilities of a president are the following:
- 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.

Tell the learners that although the president carries out the decision
making for all functions, it would be difficult for him/her to do this
alone. The president cannot manage the company on his own,
especially when the corporation has become too big. To assist him
are the vice presidents of different functional areas: finance,
marketing, production and administration.

Determine from the list of roles written on the board the functions
that pertain to the respective VPs. Add the following functions if
needed:
•VP for Marketing: The following are among the responsibilities of
VP for Marketing - Formulating marketing strategies and plans. -
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.
(Cayanan, 2015)
•VP for Production: The following are among the responsibilities of
VP for Production:
- Ensuring production meets customer demands.
- 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. (Cayanan,
2015)
•VP for Administration: The following are among the responsibilities
of VP for Administration:
- Coordinating the functions of administration, finance, and
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. (Cayanan,
2015)

Finally, focus the learners’ attention to the role of the VP for finance
as this is where the rest of the topics for this course will revolve.
E. Discussing new PPT Presentation
concepts and practicing
new skills #2 Functions of a Financial Manager

Teacher Tips: Write the four functions on the board and identify
what is the role of the Financial Manager in each function.

 Identify the four functions of a VP for finance (CFO) as follows:


- Financing - Investing - Operating - Dividend Policies

• Recall from the previous session that there are situations when we
are faced with lack of funds. Financing decisions include making
decisions on how to fund long term investments (such as company
expansions) and working capital which deals with the day to day
operations of the company (i.e., purchase of inventory, payment of
operating expenses, etc.).
Teacher Tips: Financing – to determine the appropriate capital
structure of the company and to raise funds from debt and equity

• The role of the VP for Finance of the Financial Manager is to


determine the appropriate capital structure of the company. Capital
structure refers to how much of your total assets is financed by debt
and how much is financed by equity. To illustrate, show/draw the
figure below:
• Recall that Assets = Liabilities + Owner’s Equity. - To be able to
acquire assets, our funds must have come somewhere. If it was
bought using cash from our pockets, it is financed by equity. - On the
other hand, if we used money from our borrowings, the asset
bought is financed by debt. - In the figure above, the total assets is
financed by 60% debt and 40% equity. Accordingly, the capital
structure is 60% debt and 40% equity.
• Ask the learners if they think there is an ideal mix of debt and
equity across corporations? - Answer: No. The mix of debt and
equity varies in different corporations depending on management’s
strategies. It is the responsibility of the Financial Manager to
determine which type of financing (debt or equity) is best for the
company.
• The advantages of debt and equity financing will be discussed in
Lesson 5: Sources and Uses of Funds.
• Recall that, previously, you discussed investing as where to put
your excess cash to make it more profitable. We expand that
definition by including cash held taken from funds as a result of
financing decisions.

• Investments may either be short term or long term.


Teacher Tips:
A. Investing
• Short term investments:
1. Plan for expected excess in cash using Financial Planning tools
such as budgeting and forecasting
2. Choose which type of investment should it invest in that would
secure the best profits
• Long term investments: Prepare a capital budgeting analysis to
determine if the long term investment will be profitable

B. Operating - determine how to finance working capital accounts


such as accounts receivable and inventories (short term vs. long
term)

•Operating decisions deal with the daily operations of the company.


The role of the VP for finance is determining how to finance working
capital accounts such as accounts receivable and inventories. The
company has a choice on whether to finance working capital needs
by long term or short term sources. Why does a Financial Manager
need to choose which source of financing a company should use?
What do they need to consider in making this decision?
- Short Term sources are those that will be payable in at most 12
months. This includes short-term loans with banks and suppliers’
credit. For short-term bank loans, the interest rate is generally lower
as compared to that of long-term loans. Hence, this would lead to a
lower financing cost.
- Suppliers’ credit are the amounts owed to suppliers for the
inventories they delivered or services they provided. While
suppliers’ credit is generally free of interest charges, the obligations
with them have to be paid on time to maintain good supplier
relationship. Such relationships should be nurtured to ensure timely
delivery of inventories.
- Short term sources pose a trade-off between profitability and
liquidity risk. Because this source matures in a short period, there is
a possibility that the company may not be able to obtain enough
cash to pay their obligation (i.e. liquidity risk).
- Long term sources, on the other hand, mature in longer periods.
Since this will be paid much later, the lenders expect more risk and
place a higher interest rate which makes the cost of long term
sources higher than short term sources. However, since long term
sources have a longer time to mature, it gives the company more
time to accumulate cash to pay off the obligation in the future.
- Hence, the choice between short and long term sources depends
on the risk and return trade off that management is willing to take.
The learners will learn more about this on Chapter 4: Sources and
uses of funds.

•Dividend Policies. Recall that cash dividends are paid by


corporations to existing shareholders based on their shareholdings
in the company as a return on their investment. Some investors buy
stocks because of the dividends they expect to receive from the
company. Non-declaration of dividends may disappoint these
investors. Hence, it is the role of a financial manager to determine
when the company should declare cash dividends.
Teacher Tips: There are two types of liquidity risk: A. Risk that the
company will fail to pay its short term obligations. B. Risk that you
will not be able to sell investments in financial assets immediately.
- Before a company may be able to declare cash dividends, two
conditions must exist:
1. The company must have enough retained earnings (accumulated
profits) to support cash dividend declaration.
2. The company must have cash.

• Ask the learners what they think will affect the decision of
management in paying dividends. Remind them that dividends come
from the company’s cash and availability of unrestricted retained
earnings.
- Answer Key:
• Availability of financially viable long-term investment
• Access to long term sources of funds
• Management’s Target Capital structure

• Recall that one of the functions of a finance manager is investing


and its available cash may be used to invest in long term
investments that would increase the profitability of the company.
Some small enterprises which are undergoing expansion may have
limited access to long term financing (both long term debt and
equity). This results to these small companies reinvesting their
earnings into their business rather than paying them out as
dividends.
• On the other hand, a company which has access to long term
sources of funds may be able to declare dividends even if they are
faced with investment opportunities. However these investment
opportunities are generally financed by both debt and equity.
- The management usually appropriates a portion of retained
earnings for investment undertakings and this may limit the amount
of retained earnings available for dividend declaration.
- Creditors are not willing to finance entirely the cost of a company’s
long term investment. Hence, the need for equity financing (e.g.
internally generated funds or issuance of new shares).
- Examples of these companies are publicly listed companies such as
PLDT, Globe Telecom, and Petron. PLDT and Globe are two of the
Philippine listed companies which have generously distributed cash
dividends for the last five years (information as of 2014).

• For companies which have limited access to capital and have


target capital structure, they may end up with a residual dividend
policy. This means that when companies are faced with investment
opportunities, internally generated funds will be used first to finance
these investments and dividends can only be declared if there are
excess funds.
F. Developing mastery Do the Windshield Test if the learners understand the topic (thumbs
(Leads to Formative up if ok, thumbs down if not, thumbs on the right or left if not clear
Assessment 3) and they need further explanation.

Show the objectives and check if we meet the objectives.


G. Finding practical Let the students do a role play and apply their learnings.
applications of concepts
and skills in daily living
H. Making Integration of Learning
generalizations and • Ask the learners the following: - Explain why shareholder wealth
abstractions about the maximization should be the overriding objective of management.
lesson - What other positions can you think of that are related to
financial management? Answer: Treasurer, Controller. These are
positions under the CFO))
I. Evaluating learning Concept mapping
J. Additional activities for Quiz:
application or Test Bank - Goal of the Firm (Gitman & Zutter, 2012)
remediation True/False
1. High cash flow is generally associated with a higher share price
whereas higher risk tends to result in a lower share price.
2. When considering each financial decision alternative or possible
action in terms of its impact on the share price of the firm's stock,
financial managers should accept only those actions that are
expected to increase the firm's profitability.
3. To achieve the goal of profit maximization for each alternative
being considered, the financial manager would select the one that
is expected to result in the highest monetary return.
4. Dividend payments change directly with changes in earnings
per share.
5. The wealth of corporate owners is measured by the share price
of the stock.
6. Risk and the magnitude and timing of cash flows are the key
determinants of share price, which represents the wealth of the
owners in the firm.
7. _When considering each financial decision alternative or
possible action in terms of its impact on the share price of the
firm's stock, financial managers should accept only those actions
that are expected to maximize shareholder value.
8. An increase in firm risk tends to result in a higher share price
since the stockholder must be compensated for the greater risk.
9. Stockholders expect to earn higher rates of return on
investments of lower risk and lower rates of return on
investments of higher risk.

Multiple Choice
1. The primary goal of the financial manager is A. minimizing risk.
B. maximizing profit. C. maximizing wealth. D. minimizing return.

2. Corporate owner's receive realizable return through A. earnings


per share and cash dividends. B. increase in share price and cash
dividends. C. increase in share price and earnings per share. D.
profit and earnings per share.

3. The wealth of the owners of a corporation is represented by A.


profits. B. earnings per share. C. share value. D. cash flow.

4. Wealth maximization as the goal of the firm implies enhancing


the wealth of A. the Board of Directors. B. the firm's employees. C.
the federal government. D. the firm's stockholders.

5. The goal of profit maximization would result in priority for A.


cash flows available to stockholders. B. risk of the investment. C.
earnings per share. D. timing of the returns.
6. Profit maximization as a goal is not ideal because it does NOT
directly consider A. risk and cash flow. B. cash flow and stock
price.
C. risk and EPS. D. EPS and stock price.

7. Profit maximization as the goal of the firm is not ideal because


A. profits are only accounting measures. B. cash flows are more
representative of financial strength. C. profit maximization does
not consider risk. D. profits today are less desirable than profits
earned in future years.

8. Profit maximization fails because it ignores all EXCEPT A. the


timing of returns. B. earnings per share. C. cash flows available to
stockholders. D. risk.

9. The key variables in the owner wealth maximization process are


A. earnings per share and risk. B. cash flows and risk. C. earnings
per share and share price. D. profits and risk.
10.Cash flow and risk are the key determinants in share price.
Increased cash flow results in ________, other things remaining
the same. A. a lower share price B. a higher share price C. an
unchanged share price D. an undetermined share price

11.Cash flow and risk are the key determinants in share price.
Increased risk, other things remaining the same, results in A. a
lower share price. B. a higher share price. C. an unchanged share
price. D. an undetermined share price.

12.Financial managers evaluating decision alternatives or


potential actions must consider
A. only risk. B. only return. C. both risk and return. D. risk, return,
and the impact on share price.

13.A financial manager must choose between four alternative


Assets: 1, 2, 3, and 4. Each asset costs $35,000 and is expected to
provide earnings over a three-year period as described below.

Based on the profit maximization goal, the financial manager


would choose A. Asset 1. B. Asset 2. C. Asset 3. D. Asset 4.

14.A financial manager must choose between three alternative


investments. Each asset is expected to provide earnings over a
three-year period as described below. Based on the wealth
maximization goal, the financial manager would

A. choose Asset 1. B. choose Asset 2. C. choose Asset 3. D. be indifferent


between Asset 1 and Asset 2.

Answer Key True/False 1. T 2. F 3. T 4. F 5. T 6. T 7. T 8. F 9. F


Multiple Choice 1. C 2. B 3. C 4. D 5. C 6. A 7. C 8. B 9. B 10.B 11.A 12.D 13.B
14.A

V. REMARKS
VI. REFLECTION
A. No. of learners who
earned 80% on the
formative assessment.
B. No. of learners who
require additional
activities for
remediation.
C. Did the remedial
lessons work? No. of
learners who have
caught up with the
lesson.
D. No. of learners who
continue to require
remediation
E. Which of my teaching
strategies worked well?
Why did these work?
F. What difficulties did I
encounter which my
principal or supervisor
can help me solve?
G. What innovation or
localized materials did I
use/discover which I
wish to share with other
teachers?