Money Management in the
Organizations
1- Accounting activities: Recording and analyzing
monetary information
2- Financial activities: Fund (money) raising and
investing decisions
FINANCE
ACTIVITY OF PLANNING, OBTAINING AND
MANAGING ORGANIZATION’S USE OF FUNDS IN
ORDER TO ACHIEVE GOALS EFFECTIVELY AND
EFFICIENTLY.
Starting a business from zero or improving a
business or sometimes avoiding a failure in
recession or short-time economical or financial
crisis, managers need to raise necessary money
for the business. This is the responsibility of the
entrepreneurs and responsible line managers in
small companies and financial managers in large
companies.
Organizations need a variety of real assets to be used to
produce goods and services.
 Liquid assets: money or near money, raw or semifinished materials to be used in production .
 Physical assets: plants, machinery, equipment.
 Intangible assets: patents, copyrights, trademarks and
licences.
FINANCIAL MANAGEMENT
 is the process of managing the tasks related with
capital budgeting and financing decisions within the
organizations.
 Financial managers, all activities pertaining to the
tasks stated in the above definition are included in the
job of financial managers.
In the large and medium-sized companies or the
responsible line managers and entrepreneurs in the
small companies, financial managers are responsible
for developing and implementing such financial plans
that clearly state the way and sources of which the
organization obtains money to be used to supply
assets.
FINANCIAL ACTIVITIES
1-Capital budgeting decisions: decisions as to which
real assets the organization should acquire.
2-Financing decisions: decisions as how to raise the
funds (money).
FINANCIAL MANAGEMENT
 IN-COMPANY FINANCIAL MANAGEMENT
WORKING CAPITAL
CASH FORECASTS
 OUT-COMPANY FINANCIAL MANAGEMENT
MONEY MARKETS
CAPITAL MARKETS
FINANCIAL MANAGEMENT
IN-COMPANY FINANCIAL MANAGEMENT
(FOCUSES ON ASSETS AND LIABILITIES OF THE
FIRM)
 WORKING CAPITAL (NET WORKING CAPITAL)
The difference between the current assets and liabilities is
the net working capital.
If the current assets were less than the current liabilities,
then the company would possibly face a problem.
Cash conversion cycle; the complete cycle ofcash or the
length of time between the company’s cash payment for its
raw or semi-finished material needed in the production
and the collection of money on sales from its customers.
 CASH FORECASTS
Cash forecast are used to assess the possible
movements of cash in the near future.
The cash situation of the company especially in the
recession or in buyers’ market conditions, has vital
influence over the company’s achivements and
survival.
Cash projections prepared on a rolling basis are called
cash budgets.
Cash forecasts show whether the operations can
proceed as planned.
FINANCIAL MANAGEMENT
OUT-COMPANY FINANCIAL MANAGEMENT
(FOCUSES ON RAISING FUNDS FROM FINANCIAL
MARKETS)
 MONEY MARKETS
 CAPITAL MARKETS
SOURCES OF FUNDS
1- EQUITY CAPITAL
2- DEBT CAPITAL
SOURCES OF FUNDS-2
EQUITY CAPITAL
(OWNER’S MONEY)
 FUNDS PROVIDED BY OWNERS OR
SHAREHOLDERS
 FUNDS PROVIDED BY VENTURE CAPITALISTS
Venture capital is one popular type of equity
capital and capital owners investing their
money in the new, young and untired
businesses in return for the excess profits.
SOURCES OF FUNDS-3
DEBT CAPITAL
(BORROWED MONEY: funds raised through
borrowing from creditors.)
 SHORT TERM LOANS (to be paid back in
less than 1 year.
TRADE CREDITS, BANK LOANS, COMMERCIAL
PAPERS, FACTORING FUNDS
 LONG-TERM LOANS (to be paid back in
more than a year)
CORPORATE BONDS, FINANCIAL LEASINGS
 DEBT CAPITAL
Secured loans provide guarantee for the lender given by
the borrower in the form of bonds,assets and security
deposits or mortgages.
Unsecured loans do not provide any guarantee for the
lender and therefore are more risky than secured
loans.
Leverage relates to a business operated with borrowed
money , in other words, dept capital.
FINANCIAL MARKETS
MARKETS THAT COMPANIES AND GOVERNMENT RAISE
FUNDS TO FINANCE THEIR ACTIVITIES
 MONEY
MARKETS
 CAPITAL
MARKETS
MONEY MARKETS
PROVIDES MONEY TO COMPANIES OR GOVERNMENTS AS SHORT OR
LONG-TERM LOANS
PLAYERS
INSTRUMENTS
 TURKISH CENTRAL BANK
 TREASURY BILLS
 BANKS
 CERTIFICATE OF
 INVESTMENT BANKERS
DEPOSITS
 COMMERCIAL PAPERS
 REPOS
 REVERSE REPOS
 INSURANCE COMPANIES
 CREDIT UNIONS
 FACTORING COMPANIES
 FINANCIAL LEASING
COMPANIES
CAPITAL MARKETS
PROVIDES SECURITIES TO INVESTORS
PLAYERS
INSTRUMENTS
 CAPITAL MARKET
 FIXED INCOME CAPITAL
BOARD
 STOCK EXCHANGES
 INTERMEDIARIES
MARKET INSTRUMENTS
 EQUITY MARKET
INSTRUMENTS
 DERIVATIVE MARKET
INSTRUMENTS
CAPITAL MARKET INSTRUMENTS
 FIXED INCOME CAPITAL MARKET INSTRUMENTS
CORPORATE BONDS
 EQUITY MARKET INSTRUMENTS
COMMON STOCKS, PREFERRED STOCKS, INVESTMENT FUNDS,
REVENUE-SHARING CERTIFICATES, REAL ESTATE CERTIFICATES
 DERIVATIVE MARKET INSTRUMENTS
OPTIONS, FUTURES, FORWARDS, SWAPS