Table of contents:

3.1 What is finance

the financial resources used by business organizations to cover their financial needs → without money, businesses cannot operate

When might a business need finance?

1. when it is starting up
2. when it needs to buy equipment or premises
3. when it wants to expand into a new location → market development and diversification

What are the main uses of finance?

<aside> 💡 There are 2 main uses: Capital expenditure and Revenue expenditure

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Capital expenditures

the money used to buy fixed assets → durable, physical assets that belong to a business ⇒ these assets are used to generate future revenues

• buildings, factories, machines, materials, etc.

Revenue expenditure

the money used to cover day-to-day to short-term activities

• rent, property taxes, utilities, employee salaries, etc.