2. To finance the firm’s credit services 3. To finance the purchase of inventory 4. To finance the purchase of major assets Financing daily operations • Wages and salaries • Rent • Taxes • Power and light • Marketing expenses like those for advertising, entertainmen, travel expenses, telephone, and telegraph, stationery and printing, postage, etc. • Administrative expenses like those for auditing, legal, services, etc Financing the firm’s credit services • It is often times unavoidable for firms to extend credit to customers. If the engineering firm manufactures products, sales terms vary from cash to 90- day credit extension to customers. Construction firms will have to finance the construction of government projects that will be paid many months later Financing the purchase of inventory • The maintenance of adequate inventory is crucial to many firms. Raw materials, supplies, and parts are needed to be kept in storage so they will be available when needed. Many firms cannot cope with delays in the availability of the required material inputs in the production process, so there must be kept ready whenever required. Financing the Purchase of major asset • Companies, at time need to purchase major assets. When top management decides on expansion, there will be a need to make investment in capital assets like land, plant and equipment.