A business does three things. It raises money.
and then it uses that money to acquires assets to use.
And it uses them to make a profit.
Depending on what a business does, it will use assets in a different way.
A business that performs a service will use assets to do things for other people.
A business that manufactures things will use assets to make other things to sell.
When a business uses it's assets to make a profit, it is called its OPERATING ACTIVITIES.
Before a business can engage in any OPERATING ACTIVITY, it must first acquire the assets
to use in it. The process of buying assets to use in a business is called the INVESTING
ACTIVITIES of a business.
Before a business can ever INVEST in any assets to use in a business, the business must have
money to spend. What happens if a business doesn't have money? Where can it get money?
The process of raising money through investors or lenders is called a business's FINANCING
ACTIVITIES.
As a review, A business engages in three activities.
These activities are Financing Activities, Investing Activities, and Operating Activities.
Financing is raising capital, to then invest in assets, to then use in it's operations,
to make a profit.
A business must be skilled at each of these activities if it wants to be successful and
make lots of money.