Topic Summaries

Finance is at the heart of every business operation for both short-term needs and long-term investments, including paying for resources, staff, and innovation. To achieve its objectives, businesses must know where money is coming from, how it is managed, how financial performance is measured, and how financial information supports business decision-making.

• Start-up capital: buying initial equipment, premises, inventory, and technology. For example, a new bakery needs ovens, counters, and an initial stock of ingredients.
• Expansion: opening new branches, hiring more staff, or entering new markets. For example, a fast food chain may open in another city.
• Asset replacement: upgrading outdated machinery or vehicles. For example, manufacturing companies regularly need to replace the equipment they use to ensure effective and efficient operations.
• Investment in technology: automating processes or developing digital tools. For example, lots of clothing retailers have mobile apps to facilitate online shopping and incentivise customer loyalty.
• Working capital: the money needed for daily operations.
  • Working Capital = Current Assets – Current Liabilities
  • A healthy working capital level ensures the business can operate smoothly. For example, a florist might receive payments from customers upon delivering bouquets, but needs to pay suppliers upfront for flowers.