3.1 Introduction to Finance

These flashcards cover key concepts, definitions, and examples related to finance and expenditure in business.

What is the primary role of finance in business?

To provide money that supports various business activities.

What are the two types of expenditures businesses incur?

Capital expenditure and Revenue expenditure.

Define capital expenditure.

Finance spent on fixed assets that are used repeatedly in the long-term to generate sales revenue.

Define revenue expenditure.

Finance spent on the daily running of the business.

How does capital expenditure relate to organizational change?

It is crucial for implementing change in organizations.

What is a key consequence of failing to invest in capital expenditure?

Failed businesses may struggle to compete and succeed in changing markets.

List a failed business that struggled due to inability to invest in capital expenditure.

Borders, Kodak, or Toys R Us.

What contributed to the failure of Borders?

Inability to invest in digital platforms due to debts from physical stores.

What opportunity did Blockbuster miss that contributed to its failure?

Investment in developing an online rental service to adapt to changing consumer behaviors.

What is meant by sustainability in the context of revenue expenditure?

It refers to the necessity of ongoing financial investment to maintain daily operations and services.