2 finance_why_needed

2 finance_why_needed - tutor2u GCSE Business Studies What is profit Finance is the money available to spend on business needs Right from the moment

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tutor2u GCSE Business Studies What is profit? Finance is the money available to spend on business needs. Right from the moment someone thinks of a business idea, there needs to be cash. As the business grows there are inevitably greater calls for more money to finance expansion. The day to day running of the business also needs money. The main reasons a business needs finance are to: f Start a business Depending on the type of business, it will need to finance the purchase of assets, materials and employing people. There will also need to be money to cover the running costs. It may be some time before the business generates enough cash from sales to pay for these costs. Link to cash flow forecasting. f Finance expansions to production capacity As a business grows, it needs higher capacity and new technology to cut unit costs and keep up with competitors. New technology can be relatively expensive to the business and is seen as a long term investment, because the costs will outweigh the money saved or generated for a considerable period of time. And remember new technology is not just dealing with computer systems, but also new machinery
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This note was uploaded on 05/20/2010 for the course BUSINESS Finance taught by Professor N/a during the Spring '10 term at Open Uni..

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2 finance_why_needed - tutor2u GCSE Business Studies What is profit Finance is the money available to spend on business needs Right from the moment

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