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 semi- finished 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 TURKISH CENTRAL BANK BANKS INVESTMENT BANKERS INSURANCE COMPANIES CREDIT UNIONS FACTORING COMPANIES FINANCIAL LEASING COMPANIES INSTRUMENTS TREASURY BILLS CERTIFICATE OF DEPOSITS COMMERCIAL PAPERS REPOS REVERSE REPOS

CAPITAL MARKETS PROVIDES SECURITIES TO INVESTORS PLAYERS CAPITAL MARKET BOARD STOCK EXCHANGES INTERMEDIARIES INSTRUMENTS FIXED INCOME CAPITAL 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