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.
In new businesses, financing generally comes first, because a company must have money before it can invest and operate. Investing typically occurs next as the business invests in the assets it needs for operations. Operating activities follow as the company conducts its core business. At Lands' End, operations consist of manufacturing and selling business machines. Investing activities are typically next most important because how much money comes in also depends on how wisely a business invests.