MGT220H5 Chapter 4: Chapter 4 (Reporting Financial Performance) - MGT220 (2018)
Document Summary
The basic business model consists of getting cash, investing it in resources, and then using these resources to generate profits. This model can be broken down into 3 distinct types of activities: financing: obtaining cash funding, often by borrowing, issuing shares, or (in established companies) retaining profits. Financing activities also involve the repayment of debt and/or repurchase of shares: investing: using the funding to buy assets & invest in people. Investing activities also include divestitures: operating: using the assets to earn profits. In performing these activities, companies are exposed to different levels of risk & opportunities. There is an area of study devoted to this called risk management. It involves identifying risks, deciding if & how to manage risks, and monitoring risks. Companies can use various techniques to manage risks, such as educating employees, buying insurance & installing safety equipment.
