INTRODUCTION: NARRATOR

Ang orange sentences ang number ng slides sa prezi.

Narrator:

1. Greetings: Slide 1
- We are the group one-abee sixsy and we are here to explain to you the financing cycle
Nakaflash sa PPT: Cover slide with group number and name, and topic

2. Definition of financing cycle: Slide 2

- The financing cycle involves activities of obtaining necessary funds to run the organization,
repay creditors, and distribute profits to investors. There are two ways to finance which are
(1) through borrowing and (2) through issuance of stocks.
Nakaflash sa PPT: Definition of financing cycle

3. Now, Let’s see how the cycle works through a short role playing. Slide 2 pa rin

4. Please look at the name tags worn by our classmates to avoid confusion on what character they
are portraying. Slide 3
Nakaflash sa PPT: Clip art ng taong may name tag

_________________________________Start of Role Play_______________________________

SCENE 1: NARRATOR AND CFO @ CFO’s Office

Narrator:

1. Background of the company: Slide 4

- Kappu Company is a manufacturing company that produces quality cups from biodegradable
paper in the Philippines. “kappu” in Japanese is Cups. Some of its major clients are Jollibee,
Mcdonalds, KFC and Wendy’s. The company ensures customer satisfaction and product
quality. It has been operating for 3 years (established at 2014).
Nakaflash sa ppt: Pic ng factory

2. (Slide 5) One Day, as the CFO reviews the financial status of the company, she noticed that the
sales during the operating years have been profitable and fluctuating. She thought that it is a
great idea to expand to be able to develop its operations and reach a wider audience since there
is an ongoing demand for the company’s biodegradable cups.

3. (Slide 6) She prepared a capital budget proposal to be presented to the upcoming BOD meeting.
She considered the location, man power, additional equipments, etc . needed for the expansion.
Because of this, she knew that there will be a need to borrow and/or issue stocks to finance the
expansion.
 (Habang sinasabi to ng narrator, ang CFO ay nagaacting na tumitingin tingin sa documents, may
idea look, at nagsusulat ganon)
Nakaflash sa ppt: Pic ng office

SCENE 2: CFO, PRESIDENT AND 2 BOD @ BOD MEETING

Narrator: The CFO then presents the company’s financial status and explains his suggestion of expanding
the company’s operations. Slide 7

CFO:

1. Reports the financial status of the company

2. Proposed plan na magdadagdag ng planta para magincrease ang production kasi sa high demand
ng mga existing customers at possible new customers.
3. Presented her budget and ways to finance the expansion (borrowings sa bank at magiissue ng
stocks)

(Si CFO ay nasa harapan, nagprepresent sa mga board of directors.)

President: In your proposal, we are to acquire additional materials, equipment and labor which obviously
will take a huge amount of money. Are we truly innovating and gaining share on this expansion, or are we
simply adding features?

CFO: I believe, we are innovating, gaining and adding features. As I have discussed on the presentation,
which you may also see on that *turo sa mga papel nilang hawak, written report*, forecasts show positive
result for the next 5 years.

(Director 1, 2 & 3 bulong bulong kunwari, isip isip)

CFO: So are we ready to decide now? Who agrees on this upcoming expansion?

(Pag tinanong kung sino agree na mag expand ang company, 2 from the BOD ang magtataas ng kamay at
yung 1 ay hindi – conservative, takot sa risk. Nanalo pa rin ang 2 so YES mageexpand po tayo)

Nakaflash sa ppt: Pic ng board meeting

CFO: (Slide 8) So then we are all set, here’s the proposal and kindly affix your signatures as proof of
approval.

(Bibigay na ng CFO yun capital budget proposal and pipirmahan yun ng lahat ng BOD)

Nakaflash sa ppt: Sample capital budget proposal or mga taong nagssign ng papers
SCENE 3: OFFICER AND CREDITOR @ BANK

Narrator: Board of Director 1 went to the Bank to inquire regarding the application of loan and what
requirements are needed. Slide 9

Bank: Good Afternoon Mam! What can I do for you?

BOD1: Good Afternoon! I would like to inquire your policies regarding loan application for business
expansion. May I know your requirements?

Bank: What kind of business ma’am?

BOD1: Actually, this is a manufacturing corporation producing biodegradable cups.

Bank: How much is your prepared plan to loan for this business expansion?

BOD will give the capital budget proposal to the bank creditor.

BOD1: This is the proposed capital budget done by the CFO.

Bank creditor will read the proposal and study it. Bank will then give the list of the requirements and
application to BOD1.

Bank: These are the requirements and application form for your loan. As for your proposal, we will have to
look into it after you have pass the requirements. Also, we need to set a meeting with the rest of your BOD
if there are other inquiries.

BOD1: What is the possible date for our meeting?

Bank: In two weeks time, we may have our meeting for that.

BOD1: Thank you mam!

(shake hands na nagkasundo na sa date)

Nakaflash sa ppt: bank

BOD1 brings back to office the loan application and requirements.

SCENE 4: NARRATOR

Narrator: While waiting for the meeting with the bank creditor, the CFO prepares the requirements such
as the financial reports, loan application form and other requirements by the bank: (Slide 10)
SCENE 5: BOD WITH THE BANK CREDITOR MEETING

Narrator: Because of miscommunications and some issues that needed to be clarified and settled, the
company and bank creditor required more than one meeting. There also has been an ocular inspection of
the existence of the company. Slide 11

Narrator: Today is the fifth meeting that the president, board of directors and the bank creditor talk about
the final requirements and discussions for the loan agreement.

BOD 2: Good afternoon, Ma’am. Our firm would like to know if there are any updates for the application
of loan which will be used for the expansion and additional investment for our company, all as specified in
the application submitted last time we’ve talked.

Banker/Lender: Good afternoon, Ma’m. (hanap hanap nung documents then binigay yung Loan
Agreement) The proposed loan has been approved!

BOD 1: We are so glad to hear that! How much was the approved loan?

Banker/Lender: As we have reviewed and discussed the application and requirements during the meeting,
the loan granted to your company shall be in the maximum amount of P 10,000,000 (Ten Million Pesos) as
stated in the Loan Agreement. Since the company has a good credit standing.

BOD 1: How about the interest and date of payments that we have talked about during the meeting, was
it approved too?

Banker/Lender: Yes, Ma’m! The Loan shall bear a fixed interest based on prevailing market rate at the time
of initial drawdown, payable monthly. The Loan shall become due and payable without need for notice or
demand, 5 years in equal monthly annual installments of P 2,000,000 each, exclusive of interest staring on
commencing at the end of the first month from drawdown date.

President: That’s great! Here’s the promissory note, then. (Issues promissory note) Slide 12

Banker: Here are the two copies of the Loan Agreement, Kindly affix your signatures. (BOD signs the loan
agreement brought by the bank) Slide 13

Banker: The money will be available in your company’s account in 3 working days and send you a
confirmation letter, along with a copy of your agreement form to keep for your records.

BOD 2: Thank you for entrusting our company.

(magshake hands sila after tapos thank you-thank you)

SCENE 6: NARRATOR and the PPT

Narrator: The consideration received from the bank will be used for capital expenditure. The company
started the Expansion a week after receiving the consideration. The company has bought the area, hired
more workers, bought equipment and such. Slide 14

Flash sa screen: Ipapakita sa ppt yung mg symbols or images na nagpapakita ng mga binili or pinagawa
(kung san napunta si pera)

Narrator: After 6 months of continuous operations and expansions….the company has earned profits
enough to pay the allocated liability they owe to the bank

SCENE 7 BABAYAD SA BANK: TREASURER AND PRESIDENT

Narrator:

1. The treasurer reviews the supporting documents Slide 15and prepares a check for the amount Slide 16

2. The treasurer then signs the check and stamps all supporting documents as PAID slide 17

3. The check and all the supporting documents are sent to the President slide 18

4. The President reviews the documents and then countersigns the check Slide 19

5. The check and all supporting documents are forwarded to the cashier and the cashier releases the check
to the creditor’s collector and the cashier returns the voucher package to the accounting department. Slide
20

6. The Accountant reviews the completeness of the documents received from the cashier’s records, cash
disbursements, journal and post the payment of the account to the supplier’s subsidiary ledger (or pwede
knware sa computer na lahat irecord) Slide 21

(iact lahat ng sinabi)

After months of operations and expansion..

SCENE 8 BOD MEETING AGENDA: DECLARATION OF DIVIDENDS

Narrator: The President issues notice of general meeting with intent to declare dividends. General meeting
is conducted and the resolution for declaring dividend is passed along with record date. Slide 22

 Slide 23 In the event of the annual dividend, the persons who are considered members as on the
date of the annual general meeting shall be eligible to receive the dividend as the dividend is
accepted by the members on the day when annual general meeting is held.
 Listed companies are required to inform the Stock Exchange in progress of closing the Register of
members for payment of dividend declared during the annual general meeting for the
determination of names of shareholders entitled to dividend.
Narrator: The minutes recorded in a draft by the corp. secretary included the date, time and location of
the general meeting in which notice was given, the directors present and absent, quorum established, the
agreed amount of dividends per share and board actions made. The meetings were then signed by the
directors and all present in the meeting.

BOD 3: We should declare cash dividends to the stockholders amounting to since the considerations
became capital. With this, a greater demand for stock will increase its price and many investors will be
more likely to buy the stocks.
(Agree-agree mga BODs)

Extra info if asked:

CASH DIVIDEND DECLARATION IN THE PHIL
In cash dividend declaration in the Phil, the stockholders will receive cash from the corporation in
accordance with the board resolution declaring cash dividends.
1. Certification under oath by the corporate secretary on the board resolution declaring the cash dividends
2. Audited financial statements used as of the last fiscal year stamped receives by SEC and BIR
3. Audited financial statements used as the basis of such declaration duly stamped received by BIR and
SEC ( to be submitted also if the basis is other than item no.2)

Flash sa screen: meeting setting

Once the resolution is passed for declaring dividend, the dividend is paid to the shareholders.

Flash sa screen: journal entries Slide 24

SCENE 9 NARRATOR
Narrator: Another way to finance working capital requirements is the issuing of stocks. The company
decided to issue stocks. Slide 25

(yung acting lang ditto ay naguusap usap lang kayo lahat sa table all BODs, president and corporate
secretary)

Narrator: Slide 26

1. Determine the capital the company needs

2. How much stock the corporation is authorized to issue
3. Set forth the value of the shares that will be issued
4. Determine the number of shares to issue
5. Make sure you are in compliance with the state and federal securities law
6. Draft the stock subscription agreement
7. Complete the transaction

Narrator: This is the Finance cycle Slide 27…..and this is the explanation of the shown cycle Slide 28

ERIKA(President) pwede kaw na lang basa dito hanggang internal control ?

President * reads the internal control in slide 28

THANK YOU TAPOS NA OMG THANK U LORD SANA PO MAGETS NIYO PO TO GUYSZ.

______________________________________END_____________________________________
Additional Information:

*Narrator: * Optional: Explain short information about declaration or other info na aralin natin bka kasi
itanong ni Sir

Declaration of dividend (information) – pwede iflash na lang din sa screen

-Under Philippine law, dividends may be declared out of a corporation’s unrestricted retained earnings. -
-The dividends shall be payable in cash, in property, or in stock to all stockholders on the basis of
outstanding stock held by them and liquidating dividend
-The amount of retained earnings available for declaration as dividends may be determined pursuant to
regulations issued by the SEC. ----
The approval of the board of directors is generally sufficient to approve the distribution of dividends,
except in the case of stock dividends which requires the approval of stockholders representing not less
than two-thirds (2/3) of the outstanding capital stock at a regular or special meeting duly called for the
purpose.
-Dividend declaration is a discretion of the BOD. The BOD will decide on whether to declare or not.

The SEC requires submission if such dividend declaration for further processing and would require certain
documentary requirements as follows:
CASH DIVIDEND DECLARATION IN THE PHIL
In cash dividend declaration in the Phil, the stockholders will receive cash from the corporation in
accordance with the board resolution declaring cash dividends.
1. Certification under oath by the corporate secretary on the board resolution declaring the cash dividends
2. Audited financial statements used as of the last fiscal year stamped receives by SEC and BIR
3. Audited financial statements used as the basis of such declaration duly stamped received by BIR and
SEC ( to be submitted also if the basis is other than item no.2)

Journal Enties:
1. Date of declaration
Retained Earnings [Cash Dividend Declared]
Dividends Payable
2. Date or record
Memorandum entry that the firm will pay a dividend to all stockholders of record as of today, the date of
record.
3. Date of payment
Dividends Payable
Cash
PROPERTY DIVIDEND DECLARATION IN THE PHIL
Under this property dividend declaration in the Philippines, the stockholder will received assets of the
corporation, other than cash. It could investment securities of such corporation in the form of shares of
stock of other corporations.
1. Certification under the oath by corporate secretary on the board resolution declaring property
dividends.
2. List of stockholders and the allocation of the property dividend certified by the corporate secretary.
3. Audited financial statements used as of the last fiscal year stamped received by SEC and BIR.
4. Detailed schedule of the property account appearing the audited financial statements.
5. Certification of the President that the property is no longer needed in the operation of the company.

1. Date of Declaration
Retained Earnings [Property Dividend Declared]
Property Dividends Payable

2. Date of Distribution
Property Dividends Payable
Investments in bonds

STOCK DIVIDEND DECLARATION IN THE PHIL.

In the stock dividend declaration in the Philippines, the stockholder will receive the share of stock of such
corporation declaring the dividends. In effect, the stockholder will own more shares after the stock
dividend declaration in the Philippines but its percentage of ownership or equity in such corporation may
not increase. Source of stock dividend could be unissued share of stock of the corporation requiring an
application for exemptions from the Securities Regulation Code (SRC Exemption under SRC Rule 10.1) or
from the increase of capitalization in the Philippines requiring an SEC approval on the increase of authorize
capital stock.
1. Certification under oath by the corporate secretary on the declaration of stock dividends by the majority
of the directors and the stockholders representing at least 2/3 of the outstanding capital stock,
2. Audited financial statements used as of the last fiscal year stamped received by SEC and BIR.
3. Audited financial statements used as the basis of such declaration duly stamped received by BIR and
SEC ( to be submitted also if the basis is other than item no.2)
4. List of the stockholders with their respective subscribed capital stock as of the date of meeting
approving the declaration certified by the corporate secretary together with the allocation of the stock
dividend.
5 .Analysis of Capital Structure signed under oath by the treasurer

1. At the date of declaration

Retained Earnings
Common Stock Dividend Distributable
Additional Paid-in-Capital from Stock Dividend
2. At the date of issuance
Common Stock Dividend Distribution
Common Stock,par

LIQUIDATING DIVIDEND DECLARATION IN THE PHIL.

Liquidating dividend in the Philippines is distributed during the dissolution and liquidation of a domestic
corporation in the Philippines. This would mean a final distribution of the stockholder’s share in the assets
of the corporation after paying corporate creditors with preference over stockholders. Amount received
in excess of its capital considered its final share in the earnings of the corporation. A separate SEC
application and approval for liquidation is required.

1. At the date of declaration

 Retained Earnings
Additional Paid-in-Capital
Dividends Payable

2. At the date of payment

Dividends Payable
Cash