Why finance?
because finance is the beginning of the formation of a business or enterprise. money as well as to determine what activities the company's rapid berkrmbang or not. To start up begin business, a company needs
funds to purchase essential assets, support research and development, and buy
materials for production. Capital is also needed for salaries, credit extension
to customers, advertising, insurance, and many other day-to-day operations. In
addition, financing is essential for growth and expansion for a company.
Because of competition In the market, capital needs to be invested in
developing new product lines and production tecnigues and in acquiring assets
forduct lines and production technigues and in acquiring assets for future
expansion.
In financing business operations and
expansion, a business uses both short-therm and long-term capital. A company,
much like an individual, utilizes short-term capital to pay for items that last
a relatively short period of time. An individual uses credit cards or charge accounts
for items such as clothing or food, while a company seeks short-term financing
for salaries and office expenses. On the other hand, an individual uses
long-term capital such as a bank loan to pay for home or car goods that will
lasy a long time. Similary, a company seeks long term financing to pay for new
assets that are expected to last many years.
Why a company obtains capital from external
sources, the financing can be either on a short-term or long-term arrangement.
Generally, short-term financing must be repaid in less than one year, while
long-term financing can be repaid over a longer period of time.
Finances involves the securing of funds for
all phases of business operations. In obtaining and using this capital, the
decisions made by managers affect the overall financial success of a company.
Conclusion: that it can be said that finance is a peg or a measure of how the development of a company.
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