Faith Integration

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.pdf?_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.