Faith Integration

  

This assignment seeks to integrate the course concepts found in the textbook Fundamentals of Corporate Finance 10 edition by Richard A Brealey, Stewart C Myers, and Alan J Marcus and integrate them with Biblical concepts. More specifically, you will write an essay describing how the Bible is related to the topics covered in the course. 

Instructions

Below are the specifics requirements for this assignment:

· The essay must be at least 1,500 words and include a clear integration of the Bible in relation to a course topic,

· You must use at least 2 scholarly sources to substantiate your position (you may use the textbook as 1 source). 

· Sources must be cited in current APA format. 

I have attached examples of the paper I found online that can be used to assist you. If you have questions, please ask as this is a quarter of my grade

Running head: FAITH INTEGRATION

FAITH INTEGRATION 4

Abstract

What is a business run without Christian principles? Can it be successful and serve its customers, employees, and community? The authors provide a detailed analysis of these questions in the following paragraphs. Regardless of the organizational and capital structures, the integrity of the financial proformas creates trust and transparency among all the different layers of the business; internal and external. The Bible provides key points on the behaviors, thinking, and vision one should have to operate a business effectively, by creating a positive impact on the surrounding ecosystem. Following, the authors provide a correlation on the topics of corporate forms and function, financial statement integrity, and debt to the principles exposed in the Bible.

Corporate Forms and Functions

Corporations can be structured in many different ways, but no matter how one is organized, this structure is an integral part of any success the corporation may achieve (Brealey, Myers, & Marcus, 2018, p. 9). In Paul’s first letter to the Corinthians, he tries to convey the importance for the Church to organize and structure itself utilizing the distinct, varying spiritual gifts of each Christian within that structure. 1 Corinthians 12:12 (NIV) states: “Just as a body, though one, has many parts, but all its many parts form one body, so it is with Christ.” In this same way, a corporation must organize itself in the most advantageous way for that company and at the same time best utilize the distinct, varying gifts its management team and skilled workers bring to the table. Brealey, Myers, and Marcus (2018) explain that a corporation is a “distinct, permanent legal entity” that may be privately owned or have its shares traded in public markets (p. 9). While diverse and alternative corporate forms, governance, and company objectives are becoming increasingly more common, the basic goal of every corporation is to generate value by maximizing the positive impact on its stakeholders while limiting all negative impacts (Boeger, 2018, p. 10).

The smallest of the corporate structures is the sole proprietorship (Booth, 2003, p. 1434). The sole proprietor can be viewed as being much like the temple of God that is the individual Christian. Each Christian is responsible for his or her own actions, and in this same way, the sole proprietor is legally, personally responsible for any debt their business may accrue (Brealey, Myers, & Marcus, 2018, p. 9). At the opposite end of the spectrum, the general corporation is much more similar to a large church with many members. A large corporation has a board of directors, executive officers, and perhaps hundreds of thousands of shareholders (Brealey, Myers, & Marcus, 2018, p. 9). In this same way, the Church is structured with a lead pastor, perhaps an array of assistant pastors, a “board” made up of deacons and elders, and many “shareholders” who are members of the Church. The Bible frequently speaks of the importance of working together as a team for the betterment of the individual and the Church as a whole. Ecclesiastes 4:9-10 (ESV) says: “two are better than one because they have a good reward for their toil. For if they fall, one will lift up his fellow. But woe to him who is alone when he falls and has not another to lift him up!” This verse is a perfect example of how the structure of the Church, as well as that of the corporation, is meant to work successfully. The Church has been one of the most influential organizations worldwide over the last 2,000 years. It is easy to see why many of the most effective corporations have utilized similar structures.

The Integrity of Financial Statements

Integrity is defined as being honest and having strong moral principles. In addition, people’s actions and positions under difficult circumstances reflects their integrity (Toledo, 2006). Financial statements are reports and records that describe the economic position of a business. In addition, financial statements are used by the managers for decision making. Also, the statements are presented to investors and creditors for investment purposes. However, managers can have an influence on issuing misleading financial statements for their own or potential shareholder benefits. (Anderson, Mansi, & Reeb, 2004). A study which was conducted by Kiattikulwattana (2014), reveals that firms with or without managers responsibility of financial statements, tend to manipulate their earnings by reducing their expenditures or increasing their production to show a better financial position of the company in the market. Therefore, unfortunately, the integrity of financial statements is not consistent in all of the companies and investors should be more careful about their investing decisions.

Companies with honest and unbiased financial statements have higher ethical and moral values. The honest representation of financial statements helps investors and creditors make better decisions which are detrimental to the future economic positions of any organization. On the other hand, companies with manipulated financial statements, mislead their stakeholders and potential investors with false information. As it is mentioned in Luke 6:31, “Do to others as you would like them to do to you.” Financial managers and accountants should always provide accurate financial statements to their users even in tough situations since they are part of the company and they would not like it if someone took advantage of their trust and mislead them with inaccurate information.

The Debt Villain

Many companies in the airline, utilities, real estate development, steel, and chemical industries rely heavily on debt. Through our discussion of financing, we understand that financial managers frequently manipulate the firm’s securities to ensure the company’s market value is maximized and shareholders are provided the most beneficial gains. According to Modigliani and Miller’s (MM’s) debt-irrelevance proposition, we cannot manipulate the capital structure to affect the firm’s market value positively. Furthermore, MM’s approach assumes that “either passive debt management with predetermined debt levels or active debt management with capital structure targets is applied” to the firm’s financial strategy (Dierkes and Schafer, 2017). While MM’s stance is debatable, it is valuable in that it sheds light on the idea that the cost of acquiring debt is less than the cost of equity which, can place significant financial risk on a firm.

While the Bible does not condemn debt, it urges that debt be acquired responsibly and paid off quickly. Scripture highlights that “when you are in debt to another, you enter into a slave/master relationship with your creditor” (Proverbs 22:7). Therefore, it is important for individuals to, “pay to all what is owed to them” and also give to others that are less fortunate (Romans 13:7). While beneficial, “the more firms borrow, the higher the odds of financial distress,” which can ultimately result in bankruptcy (Brealey, Myers, & Marcus, 2018, p. 491). A plausible solution for firms is for financial managers to ensure adequate financial slack exists. Additionally, internal financing options should be exhausted prior to searching for external options which carry more threat. If internal financing options are available, further business opportunities can be funded, and capital shortages can be alleviated (He, Chen, & Hu, 2019).

Conclusion

Operating a business under Christian principles creates trust and transparency with everyone involved; including customers, partners, and employees. When one focuses on the longevity of a business, it cares to operate with integrity and honesty, without hesitation. A great business follows what one learns from Ecclesiastes 4:9-10: “two are better than one because they have a good reward for their toil. For if they fall, one will lift up his fellow. But woe to him who is alone when he falls and has not another to lift him up!” A successful business is one that follows and applies the Christian principles at all times, regardless of the cost.

References

Anderson, R. C., Mansi, S. A., & Reeb, D. M. (2004). Board characteristics, accounting report integrity, and the cost of debt. Journal of Accounting and Economics, 37(3), 315-342. doi:10.1016/j.jacceco.2004.01.004

Brealey, R. A., Myers, S. C., & Marcus, A. J. (2018). Fundamentals of corporate

finance with Connect (9th ed.). Boston, MA: McGraw-Hill.

Boeger, N. (2018). Beyond the Shareholder Corporation: Alternative Business Forms. Journal of Law and Society, 45(1), 10-28. doi:10.1111/jols.12076

Booth, R. A. (2003). Form and Function in Business Organizations. The Business Lawyer, 58(4), 1433-1448. doi:10.2139/ssrn.378740

Dierkes, S., & Schäfer, U. (2017). Corporate taxes, capital structure, and valuation: Combining

Modigliani/Miller and Miles/Ezzell. Review of Quantitative Finance and Accounting, 48(2), 363-383. doi:10.1007/s11156-016-0554-4

He, Y., Chen, C., & Hu, Y. (2019). Managerial overconfidence, internal financing, and

investment efficiency: Evidence from China. Research in International Business and Finance, 47, 501-510. doi:10.1016/j.ribaf.2018.09.010

Kiattikulwattana, P. (2014). Earnings management and voluntary disclosure of management’s responsibility for the financial reports. Asian Review of Accounting, 22(3), 233-256. doi:10.1108/ARA-11-2013-0075

Toledo-Pereyra, L. H. (2006). integrity. Investigative Surgery, 19(1), 1-3. doi:10.1080/08941930500542397

Running head: FAITH & BUSINESS 1

FAITH & BUSINESS 3

Abstract

Integrating faith and business is a commitment that is initiated at the very beginning of an organization. Having faith as the foundation of a business is a standard that should be set as precedent so that it is ingrained in the roots of how employees choose to do business. Keeping this standard and not compromising a business’s integrity is not always easy but should be a priority. This paper discusses how business integrates corporate goals and finance with faith. How a business decides to conduct its business as well as how its faith effects its performance is integrated throughout this paper as well. Businesses also face many challenges during that initial phases of the starting and keeping the moral integrity is key to further success. Finding that balance in business and faith can be difficult but relying on the support of trusted allies and standing firm on God’s word will give you the strength to endure.

The first two topics we learned about in this course are corporation’s goals and governance and accounting finance and performance which makes it suiting that the first part of this essay includes these topics. Financial goals are target goals such as saving for your kid’s college or saving money for retirement. Many people set financial goals in hope of reaching them but some may fail and fall into debt. In 2 Chronicles 15:7 the bible says, “But as for you be strong and do not give up for your work will be rewarded.” God states that he will reward you and he will take care of you in every situation, he is watching, he is listening and he has a greater plan for your life. Corporate governance is another large issue in all companies not just in finance. Corporate governance is known as “the rules under which firms are operating” or “the actual behavior of corporations, in terms of such measures as performance, efficiency, growth, financial structure, and treatment of shareholders and other stakeholders” as stated by Stijin Classens and Burcin Yurtoglu (2013). This means that corporate governance is basically the rules you follow in the financial world. It is important in any situation to have rules and regulations just like it is imperative to have rules to get to heaven.

Financial performance in accounting is also a huge topic to be discussed in the finance world. Financial performance is how well a firm can use all its assets to make more money or bring in more revenue. Three ways to keep up with your financial performance would be balance sheets, income statements and cash flow statements. All of these statements will help gather information on how well your finances are and are likely to help a company manage revenues. Although these statements are usually a good thing sometimes they can give managers a summary of how well you are doing in the company. This makes it more tempting to lie or cheat in order to keep your job. Luke 16:10 says, “One who is faithful in a very little is also faithful in much, and one who is dishonest in a very little is also dishonest in much.” Although you may think that it is easier and won’t hurt anything to tell a little white lie God says that even the smallest amount of dishonesty in one area of life may be dishonest in other areas.

A vast majority of businesses dream of making millions and being one of the largest and most successful companies ever made. Many of these ambitions come with a cost that sometimes requires entrepreneurs to question their beliefs or even forsake them. These obstacles are often faced at the very beginning of the business and towards the end; the process of gaining capital for the business; and paying shareholders their dividends. These stages of the business process can cause a company to compromise its beliefs but relying on faith to overcome these problems will help it succeed.

Gaining capital to start a business is one of the most difficult processes before starting. Gaining the trust of investors and potential partners is key in acquiring the required funds to start the business. The first step is to prepare a business plan. This describes your product, the potential market, the production method, and the resources time, money, employees, plant, and equipment needed for success (Brealey, R., A., 2018). It typically takes multiple investors to acquire the needed capital to open a business and scripture provides the much needed insight during this process; Dishonest money dwindles away, but whoever gathers money little by little makes it grow (Proverbs 13:11, NIV). Integrating faith and sound morals during the initial process of gathering capital and a base of investors will help assure a business keeps its standards while establishing a solid foundation on biblical principles.

Another aspect of business that happens far after the investment phase is paying dividends to shareholders on their initial investments. This is an important phase of integrating faith in business as money can cause people to compromise their standards or morals. “For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows” (1 Timothy 6:10, NIV). Some business take advantage of its initial investors forgetting what helped gain its success to begin with, by underpaying their dividends or even withholding earnings. Remaining true and maintaining a high integrity business is important to a longer lasting business as well as a loyal consumer base and potential investors.

In order for a corporation to succeed there are risks that have to be taken, the return that is expected to come back after taking the risk and capital budgeting. Market risks are “Economy wide sources of risk that affects the overall stock market.” (Brealey, R., A., 2018) In the business realm of things risks are impacted on outlying factors.  The risk premium plays a drastic role between the risk and return. Return in the eye of the investor is analyzed based on the risk premium as it generally adds an additional percentage to their return. Capital budgeting is simply “a list of planned investment projects.”

When looking at things from a biblical and Christian perspective, risks are taken when things begin to go downward. When life is throwing storm after storm trust must be given to God to turn things around. Not only that but finances depletes and every penny counts, taking the risk to still tithe is something that Christians must do, knowing that God will continue to supply needs. Giving is not to be looked at as a way to gain something in return. Faith alone comes with the greatest return anyone can ask for. Malachi 3:10 say “Bring the full tithe into the storehouse, that there may be food in my house. And thereby put me to the test, says the Lord of hosts, if I will not open the windows of heaven for you and pour down for you a blessing until there is no more need.” Budgeting in the Christian realm is known as being a good steward over finances. Titus 1:7 reads “For an overseer, as God’s steward, must be above reproach. He must not be arrogant or quick-tempered or a drunkard or violent or greedy for gain” 2 Corinthians 9:6-7 ties it all together “The point is this: whoever sows sparingly will also reap sparingly, and whoever sows bountifully will also reap bountifully. Each one must give as he has decided in his heart, not reluctantly or under compulsion, for God loves a cheerful giver.” Giving is the risk to receiving.

References

Brealey, R. A., Myers, S. C., & Marcus, A. J. (2018). Fundamentals of corporate finance with Connect (9th ed.). Boston, MA: McGraw-Hill.

S. C., & B. Y. (n.d.). Corporate governance in emerging markets: A survey. In Emerging Markets Review (Vol. 15, pp. 1-33). Science Direct.

Running head: GROUP 1 FAITH INTEGRATION 2

GROUP 1 FAITH INTEGRATION 2

Introduction

In today’s constantly changing world, applying Christian values to finance is not an issue that has been explored in depth. There are many assets (stocks, bonds, derivatives, fixed assets, etc.) companies and investors own, with each bearing the potential for return and risk. For financial managers and investors to act in accordance with their Christian faith, they would first have to seek to learn from the biblical principles about the way in which they act on behalf of others. “Whoever loves money never has enough; whoever loves wealth is never satisfied with their income. This too is meaningless.” (Ecclesiastes 5:10, New International Version)

Goals and Corporate Governance

For organizations to be successful, they need to set up goals, which will be guide their operations. In addition, they also need to have a good corporate governance which will function to ensure that all the operations within the organization are in line with the goals of the organization.  Corporate governance and goals are the basis for the success of an organization. The two work hand in hand where goals act as guidance for the governance of an organization to make the organization achieve long term goals. Through corporate governance, the organization will be controlled and directed towards the achievement of the objectives of the businesses (O’Mahony & Mason, 2017). This is how they will lead to success of the company since the objectives will be met through corporate governance.

Corporate governance is advantageous to an organization in that it ensures that there is economic growth for the organization because of organizations performs well when it focuses on its goals and objectives. Also, with good corporate governance, investors will feel attracted to invest in the business and this will help in increasing the capital for the organization. This will then lead to a lower capital cost which is very attractive as it leads to a positive share price (Yermack, 2017). As a result, organizations should be working to ensure that they have a good corporate governance. This is what the bible advocates for. The Bible encourages us to set goals as well as back them with good governance which will not give up and everything will be okay. The success of anything we do will be down to the goals we set as well as the governance that will be backing the goals. Chronicles 4:10 (NIV), “But as for you, be strong and do not give up, for your work will be rewarded.”

Company Value and Stocks

A company’s value and stock prices go hand in hand. When there is any change in the value of stock, that change is also seen in the company’s overall value. For this reason, financial managers and investors keep a close eye on stock prices. According to Brealey, Myers, and Marcus (2018) stock prices and company values are the major determining factors in how successful a company is current and how successful they will be in the future. Sometimes, financial investors may want to invest in risky stocks with the hopes of receiving a potentially large payoff, not only for the company but also themselves. Financial managers who own shares in the company they work for will be driven to increase the company’s market value. However, the future is never certain, so managers must decide how much risk they are able to accept (Arora & Marwaha, 2014).

Exodus 20:3 (NIV) states, “You shall have no other gods before me.” Sometimes investors and managers place the value of money before the needs of their clients and the company. Investors must know the characteristics of which stocks have the potential for risk and return. High risk stocks can go either way, having a big payoff or causing investors to lose money. God expects his followers to only worship and glorify Him. We His followers begin to place the gods of materialism and net worth before Him, they are not representing His best image. Any business activities must be done to benefit all of society and Man should not be corrupted or exploited simply by making a profit.

Management and Dividend Decisions

Company managers are given a strong responsibility. They are depended on by the company to make profitable and appropriate decisions to enhance business activity. With that said, managers also hold a strong importance with investors, since their actions and decisions help influence decisions on investing with a company. For this reason, a naturally developed trust relationship occurs. Managers strive to enhance business activities for their investors, and investors put strong faith in manager capabilities that their finances will be entrusted and utilized in a mutually beneficial manner.  Proverbs 27:17 states, “Iron sharpens iron, and one man sharpens another” (English Standard Version). One of those beneficial variables would be dividend consistency.

According to Brealey, Myers, and Marcus (2018) “Managers ‘smooth’ dividends and hate to cut them back.  Dividends tend to follow the growth in long-run, sustainable earnings.  Transitory fluctuations in earnings rarely affect dividend payouts” (p. 510).  Companies, and their managers, strive to continually provide reassurance to their shareholders that managers are doing their best to maintain business stability and seeking gainful practices.  Romans 15:4 states, “For whatever was written in former days was written for our instruction, that through endurance and through the encouragement of the Scriptures we might have hope” (ESV).  They also do not want to give investors false hope by acting too prematurely.  According to Chan, Powell, Shi, and Smith (2018) “Companies therefore increase dividends only in response to a permanent increase in earnings, not to a current rise in earnings if the dividend increase might subsequently have to be rescinded should the earnings rise note be permanent” (p. 127).  Managers take the trust relationship between their company and its investors very seriously and work hard to present an honest dedication to their partners.  Psalm 111:8 “They are established forever and ever, to be performed with faithfulness and uprightness” (ESV).  Managers should concentrate on betterment while not rushing their approach, something such as an increased dividend return that will just be reverted back in a short-time can lead to investor indecisions, and potential drops in the market.  According to Brealey, Myers, and Marcus (2018) “It is no surprise, therefore, to find that the announcement of a dividend increase prompts a small rise in the stock price and that a dividend cut results in a fall” (p. 510). 

Conclusion

Finance professionals are faced with the difficult task making tough decisions that can help or hinder the company or individual whom they are working for “A successful investor is not the one who makes short-term huge profits but the one who sets the clear-cut investment objectives, decides the time and period of investment, studies the market, understands his risk taking ability along with the expected rate of return and also determines the major assets traded on the financial system” (Arora & Marwaha, 2014).

References

Arora, S., & Marwaha, K. (2014). Variables influencing preferences for stocks (high risk investment) vis-à-vis fixed deposits (low-risk investment). International Journal of Law and Management,56(4), 333-343. doi:10.1108/ijlma-07-2013-0032

Brealey, R. A., Myers, S. C., & Marcus, A. J. (2018). Fundamentals of corporate finance (9th ed.). New York, NY: McGraw-Hill. 

Chan, K. F., Powell, J. G., Shi, J., & Smith, T. (2018). Dividend persistence and dividend behavior. Accounting and Finance, 58, 127-147. Retrieved from

https://onlinelibrary-wiley-com.ezproxy.liberty.edu/doi/epdf/10.1111/acfi.12208

O’Mahony, J., & Mason, M. (2017). Post-traditional corporate governance. In Globalization and Corporate Citizenship: The Alternative Gaze (pp. 74-90). Routledge.

Yermack, D. (2017). Corporate governance and blockchains. Review of Finance, 21(1), 7-31.

Running head: GROUP THREE – FAITH INTEGRATION 1

Faith Integration 4

Abstract

This group essay will provide a Christian vantage point to help the reader understand topics of finance in a Biblical sense.  Each topic will reflect greater understanding of God’s word in today’s global market.  The essay is designed to show the relevance of faith integration when doing business in Corporate America.  In scripture, the topic of finance is addressed and suggests stewards practice proper morals and ethics in their dealings.  The structural design of finance in God’s word is to provide guidelines for the development of mankind. 

 Key Words:  Finance, Corporation, Christian perspective, God’s will

Introduction

In an ever changing world, the Biblical perspective on finance is important to understand to keep with God’s will.  Faith integration manifests itself within the practice of leadership through the understanding of God’s word in the Bible.  The Bible outlines financial principles that Christians should obey in order to please God.  Financial prosperity is outlined in II Timothy 3: 16, “all Scripture is given by inspiration of God, and is profitable for doctrine, for reproof, for correction, for instruction in righteousness” (NKJV).  Stewardship can be considered the most important aspect of a Christian’s faith. 

Goals and Governance of the Corporation

Religion, particularly Christianity, is not a new element to goals and corporate governance. A corporation is defined as “a business organized as a separate legal entity owned by stockholders” (Brealey, Myers, & Marcus, 2011, p. 8). It is imperative that any organization have a set of goals and governance to be successful. Corporates must use these tools to maximize value for the stakeholders. According to Inauen, Rost, Osterloh and Frey (2010), religious insight into the economic perspective is “worth paying attention to such concepts as faith, spirituality and religion in western organizations,” (p. 39).

As we study the Bible, there are several principles that apply to finance. The main principle is to understand that God is the source of all things. Philippians 4:19 states, “My God shall supply all your need according to his riches in glory by Christ Jesus” (NIV). God is omnipotent and omnipresent. Leaders in positions of influence and decision-making should seek Godly counsel when the final outcome affects the masses. “Blessed is the man that walketh not in the counsel of the ungodly,” Psalm 1:1 (KJV). A Christian CFO’s mission should be to keep the organization out of unnecessary debt and avoid bad investments. According to Proverbs 22:7, “the rich rule over the poor, and the borrower is slave to the lender,” (NIV).

Accounting and Finance

Accounting and finances are an important and integral part of organizations. An organization would not be able to sustain without knowing their financial position. Organizations customarily utilize accounting sheets such as balance sheets, income statements, and statements of cash flow. Often, items such as taxes, cash flow, book values, and market values are financial decisions that organizations must execute upon (Brealey, Myers, & Marcus, 2012, pp. 54-70). Christians are often challenged with their faith when it is integrated in organizations. Money cannot buy happiness, eternal life, nor have any real meaning; yet many organizations worship finances; Satan’s delusion has allowed this to happen. Luke 16:13 reminds organizations that, “No servant can serve two masters; for either he will hate the one and love the other, or else he will be loyal to one and despise the other. You cannot serve God and mammon” (NKJV). God always leads in the right direction.

For organizations, scripture can be integrated in order to have faithful accounting and finances. Scripture gives organizations sixteen parables of Jesus dealing with money, over 2,000 verses on money, and one out of every ten verses in the New Testament deal with money (Financial Faithfulness, n.d.). Accounting and finances are important to our faith. As Christians, we can integrate our faith in organizations through being responsible stewards of accounting and finances. All that we have is given from God and we are to invest for God’s glory and kingdom. Proverbs 3:10 reminds one to, “Honor the Lord with your possessions, and with first fruits of all your increase; so your barns will be filled with plenty, and your vats will overflow with new wine” (NKJV).

Measuring Corporate Performance

Both private and publically held companies have a value, these values are found by looking at the shareholders’ value or market value added. It might also be important to look at ratio and returns such as: Market-to-book ratio, return on capital, return on assets, and return on equity. Companies are also able to be valued through their management.

In a privately owned company it would be more difficult to value due to there not being any public shareholders’. “There are three common methodologies used to value private businesses”: income approach, market approach, and cost approach (Peterson, 2013, p 64). Although these are all great ways to value a company it does not consider the ethics or spiritual beliefs of the management or owners. God shows value in Matthew when he speaks of not being able to compare yourself to physical items. “So do not fear; you are more valuable than many sparrows.” (Matthew 10:31, NIV). One cannot put a value on someone else’s faith, but it is possible to see a difference in the way that an organization is run, problems are handled, and managers treat their employees.

Project Analysis

Through careful planning and wise investment decisions, companies can flourish in many different economic situations. The importance of careful project analysis cannot be overstated for businesses looking to undertake new projects or expansions, allowing for accurate capital budgeting. When thinking about planning for a project we can look to Luke 14:28-32 for how we should proceed:

28 “Suppose one of you wants to build a tower. Won’t you first sit down and estimate the cost to see if you have enough money to complete it? 29 For if you lay the foundation and are not able to finish it, everyone who sees it will ridicule you, 30 saying, ‘This person began to build and wasn’t able to finish.’ 31 “Or suppose a king is about to go to war against another king. Won’t he first sit down and consider whether he is able with ten thousand men to oppose the one coming against him with twenty thousand? 32 If he is not able, he will send a delegation while the other is still a long way off and will ask for terms of peace. (NIV)

Luke extols the wisdom of carefully planning undertakings before you proceed to ensure success. Undertaking a project with the inability to finish it will result in loses in profits and productivity, as well as making your businesses reputation suffer, much like verse twenty nine above. The book, Fundamentals of Corporate Finance (2011), gives us many steps that must be taken to properly conduct project analysis. This can be tied in what Luke describes, careful planning, knowing the costs before we proceed, and ensuring the success of undertakings before we proceed. Lee (2006) stated, “Capital budgeting may be the most important decision made by corporations” (p 257). This is seen as well in verse twenty eight, budgeting is a critical ingredient to success, careful analysis and planning are necessary for proper budgeting.

Risk, Return and Capital Budgeting

There are instances when people find themselves in a fix where they do not see any hope ahead. From the topic covered in the class reading, it is evident that the CFO is in a struggling company that has adopted a new product that is likely to revolutionize the company’s operation. However, the product may take more than two year before being sold into the public. Some managers when confronted in such situation may opt to use unorthodox means in order to ensure that the company continues to run. However, this will be an action against the business ethics. Business ethics are formulated based on God’s commandments. For instance, the initial commandment requires that business should not focus mainly on profit making as the sole objectives; they should also uphold integrity and honesty in the business operation. The ninth commandment states that one should not covet; this requires that business operators ensure fair dealings with high level of honesty.

The business should continue operating and come up with other measures of raising finance other than exploiting their consumers through unfair pricing (Thomas, 2012). The Bible states that we should love our neighbors as we love ourselves. The Bible states that, “this is my commandment that you love one another as I love you.” These were the words spoken by Jesus in the book of Job 15:12 (NIV). The company should follow the command and ensure that they maintain good customer relations through fair dealing; this will improve the company’s chance of survival after the introduction of the new product. God is just in all His doings and this principle must be reflected in business dealings. Justice in the Bible refers to following God’s commandments to the letter.

Businessmen have the responsibility to manage and plan their activities and maintain personal relationship within the business as well as consider the ethical aspect of the business operation. Managers encounter some situations so that they can expand their scope of thinking. For instance, in this case, the CFO must develop fair strategies of raising finance to sustain the business until the new product is introduced in the market. In the book of Matthew 25, Jesus denounces a lazy servant who buried His talent in the ground. One thing that may be evident in this case is the servant did not want to risk and at the end failed to benefit. Business operations are all about taking risk and hoping for the best possible outcome. Managers should be innovative and come up with new measures of improving their performances rather than dwelling ion the status quo (Lynn, Naughton, & VanderVeen, 2011).

Worries of the world may make people engage in sin. Jesus knew and this why He said in the parable of the seed and the sower that there are some people who hear the word of GOD but when troubles and tribulations come their way, they forget the word of God (Matthew 13:21, NIV). Financial inflow is the mainstream and the aim of any business organization, however, in cases of financial constraints, business should not take chance to engage in wicked practices (Brealey, Myers & Marcus, 2011). The CFO should be frank to the stakeholders, tell them the state of the company, and explain to them the future prospect in the company (Cafferky, 2014). This will reduce the chances of getting into trouble with the stakeholders an also ensure integrity to the business operation. Recognition of the company’s weakness and working on them is very important rather than assuming that everything is working as required. The CFO should focus on the long-term solution that will benefit all the stakeholders of the company. Recognition of ones sins result to forgiveness setting an individual free.

Working Capital Management

Managing short-term assets and short-term liabilities is vital to the efficiency and success within organizations. Organizations would not be able to maintain growth and manage profitability without effective working capital management (Krauer & Wohrmann, 2013). In the market today, many companies make the mistake of raising their credit to exceed their total assets, which in many cases has detrimental impacts. It is the responsibility of the leaders within organizations to make decisions that mitigate risk to ensure that short-term liabilities do not become greater than short-term assets. Several key components of working capital management involve managing cash flows, managing accounts receivable and managing inventory (Brealey, Myers, & Marcus, 2011).

The key components of working capital management can be applied to Christians in the way business is managed. Ecclesiastes 11:4 states, “Whoever watches the wind will not plant; whoever looks at the clouds will not reap” (NLT), which demonstrates that decisions have to be made in order for action to occur. This can be applied through working capital management in that difficult decisions must be made for companies to ensure their assets outweigh their liabilities. Proverbs 11:14 states, “For lack of guidance a nation falls, but victory is won through many advisors” (NLT), showing that it is critical to have leaders within an organization that guide appropriately in the best interest of the customer and company.

Conclusion

In conclusion there are many Biblical perspectives that can be applied to the field of finance. As business professionals, it is important to plan steps carefully and honestly, always keeping the teachings in the Bible forefront in our minds. Always remembering Jeremiah 29:11: “For I know the plans I have for you,” declares the Lord, “plans to prosper you and not to harm you, plans to give you hope and a future” (NIV). In order to experience this we must be in Gods will for our lives, staying in prayer and His word.

References

Bible Gateway. (n.d.). biblegateway.com: A searchable online Bible in over 100 versions and 50 languages. Retrieved from

https://www.biblegateway.com

Brealey, R. A., Myers, S. C., & Marcus, A. J. (2011). Fundamentals of corporate finance (7th ed.). Boston: McGraw-Hill.

Cafferky, M. E. (2014). The Ethical-Religious Framework for Shalom.

Financial Faithfulness. (n.d.). Retrieved April 21, 2015, from Bible.org:
https://bible.org/article/financial-faithfulness

Inauen, E., Rost, K., Osterloh, M., & Frey, B. S. (2010). Back to the future–A monastic perspective on corporate governance. management revue, 38-59.
Kim, D. (2006) Capital budgeting for new projects. Journal of Accounting and Economics 41 pp 257-270. Retrieved from http://ac.els-cdn.com/S0165410106000310/1-s2.0-S0165410106000310-main ?_tid=6d500098-e871-11e4-a79c-00000aab0f26&acdnat=1429653639_bcccd864f3919e7690e664cf7e67ecb9
Krauer, T. & Wohrmann, A. (2013). Working capital management and firm profitability. Journal of Management Control, 24(1). Retrieved from http://link.springer.com.ezproxy.liberty.edu:2048/article/10.1007%2Fs00187-013-0173-3
Lynn, M. L., Naughton, M. J., & VanderVeen, S. (2011). Connecting religion and work: Patterns and influences of work-faith integration. Human relations, 64(5), 675-701.
Peterson, D., (2013). Three approaches to valuing a privately held company. Financial Executive, 29(1), 64.
Thomas, D. (2012). Defining the Integration of Faith and Learning. Journal of the Institute for Interdisciplinary Studies Journal of the Institute for Interdisciplinary Studies, 14.

Running Header: Group 4 Faith Integration 1

Group 4 Faith Integration 2

The world of business is pressure filled and burdensome. There are deadlines and quotas which need to be met and at times the strain can be unbearable. Stress may come from several different directions which often cause those in senior managerial positions to make immoral or unethical decisions. Companies have done this in the past and sadly more will do it in the future.

Stress is not always a bad thing; however, when there is impossibly high expectations to make more money, to create a more efficient company, to be better than competitors and to do better than previous years it can lead people to do almost anything to meet these expectations. Corporations, such as Enron and Freddie Mac, who tweaked numbers and falsified books on multiple occasions lead the government to pass laws such as the Sarbanes-Oxley Act. These stringent laws have made finance and accounting significantly more complex and difficult, leading some corporations to return to the private sector or to list their shares in overseas markets instead of in the United States (Brealey, Myers and Marcus, 2018, p. 72, par. 1-2).

“With transparency, corporate troubles generally lead to corrective action” (Brealey, Myers and Marcus, 2018, p. 71, par. 6). When companies are transparent and honest with their struggles they can learn how to fix and heal their business. Trials and stress may cause some people to fold, but it also forces people to make changes and to learn from their mistakes and become better. By cheating the system or manipulating the numbers mistakes and problems are only temporarily buried or kicked down the road, but sooner or later the truth will come out. Galatians 6:7 teaches the lesson, “Be not deceived; God is not mocked: for whatsoever a man soweth, that shall he also reap” (King James Version). We reap what we sow. Either we sow corruption and deceit and reap the consequences of dishonesty and poor ethics or we learn from our mistakes and the mistakes of others to create a more Christ-like environment. More often than not we will come out further ahead than we would have had those trials and hardships not come.

Financial markets and institutions are important to business because they are there to help with financing that they need. When a business is trying to start up or when they need a little help they have to go to a financial institution so they can get the money that they need to start. “Businesses have to go to financial markets and institutions for the financing they need to grow. When they have a surplus of cash, and no need for immediate financing, they have to invest the cash, for example, in bank accounts or in securities” (Brealey, Myers, & Marcus, 2018)

The Bible talks about the rich and the poor and borrowers and lenders and how they are all related. Proverbs 22:7 says “The rich rules over the poor, and the borrower is the slave of the lender.” Reading this verse you can see that one thing that the Bible doesn’t really want is for those to borrow money, this is one thing that everyone knows isn’t possible especially if you are starting a business, not very many people would be able to open a business on their own without having to borrow some money, but according to the Bible if you borrow money from someone you are becoming a slave to them. The same as it says the rich rule over the poor, this could be looking at business owners ruling over their employees, it may not be like what we all think about ruling over someone but if you think about it then yes a company owner is in some sort of way ruling over their employees.

References

Brealey, R. A., Myers, S. C., & Marcus, A. J. (2018). Fundamentals of corporate finance. Boston, MA: McGraw-Hill Education.