An activity of business concerned with the acquisition and conservation of capital fund in meeting the financial needs and overall objective of the business.

1. To purchase fixed assets: Every type of business needs some fixed assets like land and building, furniture, machinery, etc. A large amount of money is required for purchase of these assets. 

2. To meet day-to-day expenses: After establishment of a business, funds are needed to carry out day-to-day operations.

3. To fund business growth: Growth of business may include expansion of existing line of business as well as adding new lines. To finance such growth, one needs more funds. 

4. To bridge the time gap between production and sales: The amount spent on production is realized only when sales are made. Normally, there is a time gap between production and sales and also between sales and realization of cash. Hence during this interval, expenses continue to be incurred, for which funds are required. 

5. To meet contingencies: Funds are always required to meet the ups and downs of business and for some unforeseen problems.