2.1.1 internal finance Flashcards
what is internal finance
money created or raised within the business without the use of any external stakeholders.
what are the three sources of internal finance
personal savings, retained profit, selling assetts
what is a disadvantage of retained profit
it can be risky as if the investment fails then the money is gone forever
what are the advantages of retained profit
you have full control over it, it can attract new investors
what are the disadvantages of selling assetts
it can be time consuming, cant be used as a start-up source of finance
what are the advantages of selling assetts
the owner can set the price, products may become obsolete so its better to sell as soon as possible and there is no interest
what are the disadvantages of personal savings
you may not have enough, it can be risky
what are the advantages of personal savings
you have full control over it, its quick to access and there is no interest
what are some reasons for raising finance
expand business, start-up a business, payoff debts, create new products and purchase stock
what is retained profit
profit the business has previously made and saved up to reinvest back into the business
what is selling assetts
selling products the business owns
what is personal savings
money the business owner has saved up in their current account
