established firms

Question 1

retained profits

Answer 1

-profits the owners have ploughed back into the business after they’ve paid themselves a dividend
-larger companies are under pressure from shareholders to give large dividends, reducing the profit they can retain

Question 2

fixed assets

Answer 2

-firms can raise cash by selling fixed assets (assets that a business keeps long term eg machinery/buildings) that r no longer in use
-limit to how many you can sell ~ sell too many and you can’t go on trading

Question 3

new share issues

Answer 3

-a limited company can issue more shares
-the money raised doesn’t have to be repaid to shareholders ~ but more shares means less control for the existing owners and the new shareholders will also expect to be paid dividends

Question 4

factors that affect choice of finance

Answer 4

• size and type of company
• amount of money needed
• length of time
  -cost of the finance