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Funding a business
Why do businesses need capital?
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[QUOTE="Caramelle, post: 220003, member: 150"] [JUSTIFY]A business needs capital to continue operating. Broadly speaking, capital refers to assets or resources that businesses use to generate revenues. Thus, for a business to achieve its profit objectives, it needs capital. Strictly speaking, a business needs working capital to sustain its day-to-day operations. It uses working capital to pay for expenditures and trade purchases and to settle short-term obligations that arise in the normal course of business. In accounting, working capital is determined by comparing current assets and current liabilities. When current assets exceed current liabilities, it somehow indicates that the company is liquid and is operating efficiently. However, too much of it is not necessarily a good thing because it could suggest inefficiencies in inventory management or deficiencies in cash management. As a business person, you would want your working capital to be adequate but not excessive. [/JUSTIFY] [/QUOTE]
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Why do businesses need capital?
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