Business Finance (VSAQs)
Commerce-1 | 8. Business Finance – VSAQs:
Welcome to VSAQs in Chapter 8: Business Finance. This page includes the most important FAQs from previous exams. Each answer is provided in simple English and presented in the exam format. This approach helps you prepare effectively and aim for top marks in your final exams.
VSAQ-1: What is Business Finance?
Business Finance is like the money a business needs to keep things running smoothly. Imagine you’re running a small café. To make sure your café operates well, you need funds to buy ingredients, pay your staff, and maybe even renovate the space from time to time. This is where business finance comes in—it’s the money that supports all these activities. It’s often called the lifeblood of a business because, without it, the business can’t function. According to experts like Howard and Upton, business finance isn’t just about having money; it’s about managing that money well. This includes making sure there’s enough cash on hand and arranging credit if needed, all to keep the business moving forward and achieving its goals.
VSAQ-2: What is Working Capital?
Working Capital is like the day-to-day cash a business needs to keep everything ticking over. Think of it as the money you need in your wallet for everyday expenses—buying groceries, paying for utilities, and covering small unexpected costs. In a business, working capital is the money used to pay for daily expenses like buying raw materials, paying employees, and handling other operational costs. It’s essential because it ensures that the business can continue to operate smoothly without any interruptions. Without enough working capital, a business might struggle to meet its short-term obligations and keep its operations running efficiently. That’s why working capital is often referred to as the lifeblood of a business, ensuring it can sustain itself day after day.