Otherwise the company would decide not to undertake the expansion. If the company expected a loss on the new venture, it would look for investment opportunities elsewhere. They fit in by allowing you, as a business manager, to tie together the operating, investing, and financing activities of the firm, in this case, Lands' End. A firm's operating activities relate directly to its net income. Before Lands' End began operating in 1963, it had to invest in assets that the company needed to conduct its business.
Assets are the resources that a business uses to produce a product or deliver a service.
Investing activities relate to the purchase and sale of assets such as land, buildings, and equipment. Lands' End owns land in Wisconsin, warehouses its goods in buildings, and uses equipment to move merchandise through the warehouse en route to United Parcel Service and other shippers. To purchase these assets, Lands' End had to undertake financing activities. Financing activities relate to the ways a company obtains money for investing and operating activities. Most companies finance their operations with a combination of the two.