Read this preview and watch the video to get an overview of what you'll learn about in this chapter. As you watch the video and prepare to read the chapter in the textbook, consider the questions below.
All businesses, no matter where they are located or what they are producing, need money. Typical business activities like hiring employees, replacing outdated equipment, paying suppliers, and funding expansion all require financial resources.
In this chapter, we focus on two needs of business organizations: first, the need for money to start a business and keep it going, and second, the need to manage that money effectively. We also look at how firms develop financial plans and evaluate financial performance. Then we compare various methods of obtaining short-term financing-money that will be used for one year or less. We also examine sources of long-term financing, which a firm may require for expansion, new-product development, or replacement of equipment.
- Although millions of people dream of starting their own business, it takes money to open the doors. Assume you are one of those millions of would-be entrepreneurs. What type of business would you start? Where would you get the money needed to start your business?
- The job of a financial manager is often compared to that of a magician. What types of cash needs do business firms experience that make the financial manager's job so difficult?
