a. What are the purposes and uses of assets? b. What is the main risk of...
a. What are the purposes and uses of assets?
b. What is the main risk of buying or borrowing capital to invest in an asset?
c. What financial factors should you consider when deciding to borrow capital?
Homework Answers
a. The purpose of assets is that it helps in the business operations and helps in creating value for the business. Assets also help in producing goods and services which helps in generating revenue and income for the business.
b. When we borrow capital and invest, we risk of losing more than
what we have what we have actually invested in the business. When
we borrow capital and invest, we incur debt on which interest
payments have to be made. In case the business fails,the borrower
has to pay back the principal with interest. Which makes him lose
more than the capital invested.
c. When a business decides to borrow capital, the financial factors to be considered are:
- Weather the business can make the interest payments.
- Does the business have sufficient profits to pay interest on the debt.
- What is the existing level of debt in the business.
Add Answer to:
a. What are the purposes and uses of assets?
b. What is the main risk of...
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