Business Goals and Activities

Major goals of all business are profitability and liquidity.

Profitability
Profitability is the potential of a business to be successful. It is the ability of a business to earn a financial income or gain.

Liquidity
Liquidity is the availability of cash to settle financial commitments when the are due.

For a business to achieve these goals, they should engage on business activities. The three types of business activities are financing, operating and investing.

Financing Activities
Financing activities involves obtaining resources to start the business and keep it going. These activities include obtaining and repaying loans, and also having investments and withdrawals by the owner.

Operating Activities
Operating activities involves the use of resources to design, produce, distribute and market goods and services. These activities include buying and selling of inventory, rendering services to customers and production.

Investing Activities
Investing activities involve spending capital to acquire other resources to help achieve the entity's objectives. These activities include buying land, building, equipment and other resources needed in operating the business and also selling them when they are no longer needed.