Examples of Internal Sources

Question 1

Owners Funds

Answer 1

money that is put into a business from the owners private savings

Question 2

Owners Funds Advantages

Answer 2

• no need to pay interest or repay finance

- Retention of ownership by the individual

Question 3

Owners Funds Disadvantages

Answer 3

• Amount available may be limited
• Shareholders may prefer to see short term returns
• Not an option for start up businesses

Question 4

Retained Profits

Answer 4

When businesses make profits,the owner can decide to spend these on themselves or to use some or all of the profits to expand and improve the business.

Question 5

Retained Profits Advantages

Answer 5

• internal,therefore no need to repay instantly
• Does not incur additional costs such as interest payments
• control is not loss

Question 6

Retained Profits Disadvantages

Answer 6

• may be limited funds available
• shareholders may prefer to see short term returns on their investment
• not an option for a startup business

Question 7

Sales Of An Asset

Answer 7

Some businesses will have possessions that they no longer need.These can b sold off to raise money needed for other investments.