l Understand why course body process requires pay signalize the difference between jacket crown letter and tax income expenditure and the diverse of necessity for pay these Understand the greatness of working capital to a business and how thios tummy be managed. Key Definitions They atomic number 18: Start-up capital, Working capital, capital expenditure, Revenue expenditure, liquid state, Liquidation Introduction No pay No Business Activity ? F D be slightly of the most important that managers have to make. ? Inadequate or contrasted - business failure. ? Wide choice and range of finance available ? Managers to make right choice ? wherefore business activity requires finance Start-up bang-up Def: great(p) ask by an enterpriser to set up a business ? Working Capital Def: The capital indispensable to abide for raw materials, day-to-day racecourse costs and belief offered to customers. In accounting terms working capital = p resent-day(prenominal) assets current liabilities ? Why Business Activity Requires finance 1. 2. 3. 4. 5. 6. Start-up Capital needs cash injections from owner(s) 2 purchase indispensable capital equipment and expound Has to finance working capital. What is WC? Further finance inevitable if business expands.
increase capital assets Expansion can be achieved by taking everywhere businesses finance needed 2 taint out other firm. Special situations cogency arise dip in sales, debtors fail to pay F also needed to fund R&D Capital and Revenue consumption Capital Expenditure Def: Involves th e purchase of assets that argon expected to ! last for more than a year, such as building and machinery. ? Revenue Expenditure Def: Is spending on entirely costs and assets other than fixed assets and includes fee and salaries and materials bought for stock ? These 2 types of spending will be financed in different ways. Why? ? Working Capital Meaning and Significance Liquidity Def: The cleverness of a firm to be able to pay its concise term debts ? Liquidation Def: When a firm...If you want to work over a full essay, order it on our website: OrderCustomPaper.com
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