2.1.1 internal finance

Question 1

internal finance (def.)

Answer 1

ways to secure funding within the business

Question 2

personal savings (def.)

Answer 2

the use of personal money saved up by the owner

Question 3

personal savings adv.

Answer 3

no costs involved e.g interest

Question 4

personal advantages dis.

Answer 4

could be a risk to the owner as it’s their own money

Question 5

retained profit (def.)

Answer 5

profit made and kept by the business instead of spending it

Question 6

retained profit adv.

Answer 6

cheap to use

Question 7

retained profit dis.

Answer 7

danger of holding too much profit - not growing the business enough

shareholders will want dividends

Question 8

asset disposals (def.)

Answer 8

where a company’s assets are sold for cash

Question 9

asset disposals adv.

Answer 9

quick way to raise finance

can sell unused assets

Question 10

asset disposals dis.

Answer 10

not all businesses will have assets to sell

will lose access to asset (not good if they are crucial to operations)