2.1.1 Internal finance Flashcards
1
Q
What is internal finance?
A
Money that is raised from within the business, finance is generated by the owners of the business and no involvement of a 3rd party.
2
Q
What is owners capital?
A
Capital provided by the owners in a business
3
Q
What is retained profit?
A
Profit generated by a business after tax that is put back into the business and not returned to the owners
4
Q
What is sale of assets?
A
an established business may be able to sell assets in return to raise assets e.g. machinery
5
Q
What are the advantages of internal finance?
A
- capital is available immediately
- no involvement of third parties
- business will not require credit checks
6
Q
What are the disadvantages of internal finance?
A
- limited amount of money
- limited growth
- less flexible
