BUSI 1101 Chapter Notes - Chapter 1: Share Capital, Finance Lease
11 Apr 2018
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Learning objective 3: explain the three main types of business activity. All businesses are involved in 3 types of activities: financing, investing, operating. All result in inflows of cash (cash flowing into company) or outflows of cash (cash flowing out of company) Capital money required to start any business. Two primary ways of raising capital: issuing or selling shares (equity financing) in exchange for cash or assets, borrowing money (debt financing) First transaction when building a corporation is the issue of shares to shareholders for ash or assets: may obtain additional equity financing by selling shares to investors, results in an inflow of cash. If only one class of shares exists, it is known as common shares. Additional financing is often required: provided by lenders or creditors, if funds have been borrowed, shareholders have only a residual claim on assets of corporation.
