[mj23].

081267609783.
Giraldi Sihaloho.
Management MR B.
WHY FINANCE?
Answer these following questions.
1. What are some of the primary consideration for an owner starting up a business?
Some of the primary consideration for an owner starting up a business are product, systems
management, market or consumer analysis, marketing strategies, the financial analysis.
2. How does a company use its money of capital?
Careful planning, most entrepreneurs raise venture capital without any obvious planning, focus
on one business, you need to focus on one business that you like, reduce debt, consulting, your
business financial monitor, make the cash.
3. An individual as well a company needs to borrow money. When an individual borrows money,
it is known as personal financing. Personal financing can be obtained through a short-term or
long-term individual financing?
Short-term financing: Short term finance refers to financing needs for a small period normally
less than a year. In businesses, it is also known as working capital financing. This type of
financing is normally needed because of uneven flow of cash into the business, the seasonal
pattern of business, etc.
Long-term financing: Long-term finance can be defined as any financial instrument with
maturity exceeding one year (such as bank loans, bonds, leasing and other forms of debt
finance), and public and private equity instruments.

VOCABULARY
Bellow is a list of terms that you will find in the text. As you read ‘Why Finance?’. See
understand each term. Use this as a working list and add other terms with you are unfamiliar.
NOUNS VERBS ADJECTIVES OTHER
Consideration Purchase Primary similarly
Funds utilize external
Capital start up short-term
Investment support
Finance acquire
Credit extension last
Charge account obtain
Arrangement expect
repay

Read this following passage entitled ‘Why Finance?’ carefully. Be sure that you understand
it. As you have finished reading it, then you may start to answer the following questions (1
to 11). You need to send me the answers in Noveber 14 th , 2020. Don’t forget Monday,
November 16 th , 2020 we will have the Mid-Semester Test.

WHY FINANCE?
One of the primary consideration when going into business is money. Without sufficient
funds a company cannot begin operations. The money needed to start and continue operating a
business is known as capital. A new business needs capital not only for ongoing expenses but
also for purchasing the purchasing necessary assets. These assets-inventories, equipment,
building, and property-represent an investment of capital in the new business.
How this new company obtains and uses money will, in large measure, determine its
success. The process of managing this acquired capital is known as financial management. In
general, finance is securing and utilizing capital to start up, operate, and expend a company.
To start up or begin business, a company needs funds to purchase essential asset, support
research and development, and buy material for production. Capital is also needed for salaries,
credit extension to customer, advertising, insurance, and many other day-to-day operations. In
addition, financing is essential for growth and expansion of a company. Because of competition
in the market, capital needs to be invested in developing new product lines and production
techniques and in acquiring assets for future expansion.
In financing business operations and expansion, a business uses both short-term and long-
term capital. A company, much like an individual, utilizes short-term capital to pay for item that
last a relatively short period of time. An individual uses credit cards or charge account for item
such as clothing or good, 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 a
home or car-goods that will last a long time. Similarly, a company seeks long-term financing to
pay for new assets that are expected to last many years.
When a company obtains capital from ex term sources, the financing can be either on a
short-term or a 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.
 Finance involves the securing of found 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.

COMPREHENSION
A. Answer the following question about finance. The questions which are starred cannot be
answered directly from the text. Space is provided at the and for you to add your own
questions.
1. What does a company need in order to begin operations?
Answer:
A company in order to begin operations need money is known as capital. Capital not only
for ongoing expenses but also for purchasing the purchasing necessary assets.

2. What is capital?
Answer:
The money needed to start and continue operating a business is known as capital.

3. Where can capital be acquired?

Answer:
Capital can be acquired from short-term and long-term capital.

4. Why does a new business need capital?

Answer:
A new business need capital to purchase essential asset, support research and
development, and buy material for production. Capital is also needed for salaries, credit
extension to customer, advertising, insurance, and many other day-to-day operations. In
addition, financing is essential for growth and expansion of a company. Because of
competition in the market, capital needs to be invested in developing new product lines
and production techniques and in acquiring assets for future expansion.

5. What are some examples of ongoing expenses that a company encounters?

Answer:
Some examples of ongoing expenses that a company encounters are an individual uses
credit cards or charge account for item such as clothing or good, 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 a home or car-goods that will last a
long time. Similarly, a company seeks long-term financing to pay for new assets that are
expected to last many years.

6. What is finance?
Answer:
 Finance is a broad term that describes activities associated with banking, leverage or
debt, credit, capital markets, money, and investments. Basically, finance represents
money management and the process of acquiring needed funds.

7. Why does a company use both short-term and long-term capital?

Answer:
A company, utilizes short-term capital to pay for item that last a relatively short period of
time. And a company seeks long-term financing to pay for new assets that are expected to
last many years.

8. How might a business utilize the short-term capital that it has borrowed?
Answer:
A company, much like an individual, utilizes short-term capital to pay for item that last a
relatively short period of time. An individual uses credit cards or charge account for item
such as clothing or good, while a company seeks short-term financing for salaries and
office expenses.

9. What is the repayment period for short-term financing? For long-term financing?
Answer:
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.

10. How you ever financed anything on a short-term or long-term arrangement?

Answer:
I have financed something in a short term arrangement, for example, when I buy
something in the market. and I have also financed something with a long-term
arrangement, for example when I bought gold to invest.

11. What are some items for which a company might seek short-term financing? Long-term
financing?
Answer:
A company might seek short-term financing if there are short-term needs. For example,
for company operations. And a company might seek long-term financing if there are if a
large amount of money is needed for a company's investment, profit from change is
neither sufficient nor sufficient to meet the needs of company finance.