Final answer:
The correct answer is option a. A firm purchases assets primarily to generate revenues, which in turn lead to profits and can be reinvested as financial capital. When profits are insufficient, borrowing from banks and issuing bonds becomes an alternative capital source.
Step-by-step explanation:
The primary reason a firm purchases assets is to generate revenues. Revenue generation is the fundamental goal of acquiring assets because it leads to the creation of profits. Profits are critical as they can be reinvested back into the business for purchases of equipment, structures, and research and development, thereby becoming a primary source of financial capital.
However, not all firms have sufficient profits to invest, especially new firms or those experiencing temporary downturns. In such cases, firms may seek external financial capital sources, including borrowing from banks and issuing bonds, to sustain investments and fuel future profits. These borrowing methods are viable when a firm has a track record of earning significant revenues or profits, allowing them to make promises to pay back the money with interest.