Just like the body needs blood to live, a business needs money to survive. If something were to happen to the flow of money in a business, the business would soon die.
Businesses need money for a few reasons:
- To pay everyday expenses, including rent, utilities, and employees
- To replace and expand inventory (the quantity of materials required to make finished goods or the quantity of finished goods themselves)
- To expand and grow (by purchasing more factories and equipment, for example)
- To meet the interest payments on debts
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