What are business activities?

What Are Business Activities?

Business activities include any activity a business engages in for the primary purpose of making a profit. This is a general term that encompasses all the economic activities carried out by a company during the course of business. Business activities, including operating, investing and financing activities, are ongoing and focused on creating value for shareholders.

KEY TAKEAWAYS

Business activities are any events that are undertaken by a corporation for the purpose of earning a profit.
Operating activities relate directly to the business providing its goods to the market, including manufacturing, distributing, marketing, and selling; they provide most of the company's cash flow and hugely influence its profitability.
Investing activities relate to the long-term use of cash, such as buying or selling a property or piece of equipment, or gains and losses from investments in financial markets and operating subsidiaries.
Financing activities include sources of cash from investors or banks, and the uses of cash paid to shareholders, such as payment of dividends or stock repurchases, and the repayment of loans.

Comments

EXTERNAL COSTS AND EXTERNAL BENEFITS

External costs An external cost occurs when producing or consuming a good or service imposes a cost (negative effect) upon a third party. If there are external costs in consuming a good (negative externalities), the social costs will be greater than the private cost. The existence of external costs can lead to market failure. This is because the free market generally ignores the existence of external costs. External marginal cost (XMC) the cost to a third party from the consumption/production of one extra unit. Example of External Cost Driving a car imposes a private cost on the driver (cost of petrol, tax and buying car). However, driving a car creates costs to other people in society. These can include: Greater congestion and slower journey times for other drivers. Cause of death for pedestrians, cyclists and other road users. Pollution, health-related problems. Noise pollution. Example of Production External Cost Producing electricity from burning coal leads to air ...

THE ROLE OF PROFIT IN AN ECONOMY

WHAT IS A PROFIT? Profit is the surplus revenue after a firm has paid all its costs. Profit can be seen as the monetary reward to shareholders and owners of a business. In a capitalist economy, profit plays an important role in creating incentives for business and entrepreneurs. For an incumbent firm, the reward of higher profit will encourage them to try and cut costs and develop new products. If an industry is profitable, it will encourage new firms to enter. If a firm becomes unprofitable, it will either have to adapt and change or close down. This profit motive can help increase efficiency, provide greater choice for consumers and allocate resources according to consumer preferences. However, profit can have a downside. To increase profits, firms may take action which cause market failure . For example, an asset stripper could buy a failing firm – selling off its assets and then make workers redundant. Alternatively, a firm may increase profits by finding ways around environme...

BUSINESS LOCATION

INTRODUCTION Most business studies textbooks can't resist starting a section on business location with the following phrase: "The three most important things in retailing are – location, location and location". However, although it is a well-worn cliché – it still has some merit. It was reputedly first said by the former boss of Marks and Spencer (Lord Sieff) to describe the main success factors in his business. And certainly in retailing, if you get the location wrong, it can have a serious and often disastrous effect on the business. For businesses in some sectors, location really is critically important. For others, it is a relatively minor decision. The key is to consider the main issues faced by a business choosing a business location and to address the most appropriate way of making a choice. Location decisions are usually pretty important – to both large and small businesses. The location decision has a direct effect on an operation's costs as well as its abi...

Scarcity

Search This Blog