When
starting
a
business
,
the
first
step
is
often
to
secure
enough
,
which
refers
to
the
money
used
to
set
up
or
invest
in
a
company
.
Entrepreneurs
may
funds
from
a
bank
or
other
financial
institutions
,
typically
through
a
loan
,
which
they
will
need
to
repay
with
interest
over
time
.
Another
option
for
raising
capital
is
issuing
or
,
which
represent
partial
ownership
in
the
company
.
Investors
who
purchase
these
become
shareholders
(
or
stockholders
)
and
,
in
exchange
,
they
expect
to
receive
a
,
a
portion
of
the
company's
profits
.
Once
the
business
is
set
up
,
effective
financial
management
becomes
crucial
.
One
of
the
key
financial
indicators
that
businesses
monitor
is
,
which
refers
to
the
difference
between
current
assets
and
liabilities
.
This
ensures
the
company
has
enough
resources
to
cover
day
-
to
-
day
expenses
.
Another
important
aspect
of
managing
a
company
?
s
finances
is
tracking
its
profit
and
(
or
statement
)
,
which
records
generated
from
sales
and
incurred
,
such
as
salaries
,
rent
,
and
utilities
.
The
difference
between
revenue
and
expenses
is
the
,
which
shows
the
company
?
s
profitability
.
Some
businesses
may
choose
to
their
profits
rather
than
distribute
them
as
dividends
.
These
can
be
reinvested
into
the
company
for
future
growth
or
to
pay
off
.
Companies
must
also
prepare
financial
statements
,
including
the
,
which
provides
a
snapshot
of
the
company
?
s
financial
position
by
listing
its
assets
,
liabilities
,
and
equity
at
a
given
time
.
and
lenders
are
interested
in
these
documents
because
they
provide
valuable
information
about
a
company
?
s
ability
to
generate
returns
.
Investors
,
in
particular
,
aim
to
invest
their
money
in
companies
with
strong
financials
,
while
lenders
look
at
the
company's
and
levels
to
determine
its
creditworthiness
.
If
the
company
?
s
liabilities
exceed
its
assets
,
it
may
find
itself
more
than
it
can
afford
to
pay
back
.
Finally
,
companies
often
issue
to
raise
funds
,
promising
to
repay
the
bondholders
with
interest
.
Bonds
are
different
from
stock
since
they
represent
a
the
company
must
pay
back
,
rather
than
equity
ownership
.
For
businesses
that
purchase
goods
,
proper
management
of
retained
earnings
and
working
capital
is
essential
to
avoid
falling
into
financial
trouble
.