As you may already know, in spite of the recent descending economic spiral, the fast paced global marketplace faces considerable challenges in the areas saving, investing, and spending. Lately, the stock and bond markets have seen better days. The financial industry’s customers have lost faith and hope in its stability, and instead of looking up to large corporations many people are looking at them in expectation of scandal. Nevertheless, there are individual people, groups, and institutions that have hope that things will get better. They assist in building our nation’s economy by becoming better stewards of their home finances, taking risks in investing in businesses again, and promoting new businesses which can be seen in the primary market.
Finance is understood to be the science of managing money and other assets such as investments and credit. Finance functions for everyone on personal levels, on organizational levels, on each national level, as well as the global level.
Capital is a term heard primarily in business for the purpose of referencing goods and cash used to generate income. Capital represents the financial strength and net worth of an organization. An organization’s goal is to maintain capital. They know that they have been successful at maintaining it when their assets outweigh the liabilities. The more capital a business has, the less debt they incur.
Debt happens when businesses and individuals owe goods, services, and money. It is an obligation to something or someone. Many people live on the premise that being debt-free offers the best lifestyle.
Cash flow determines whether or not an organization will need to open itself to debt. In reference to accounting, accounts payable and accounts receivable represent the organization’s cash flow. It is positive if the closing balance is higher than the opening balance. Otherwise,