IB Sources of finance

Question 1

retained profit

Answer 1

the value of profits that the business keeps after paying taxes to the government and dividends to its shareholders to use within the business. Often used for purchasing/upgrading fixed assets.

Question 2

sale of assets

Answer 2

businesses sell their dormant assets (unused properties that they own), such as selling old machinery and computer equipment that have been replaced.

Question 3

reduce working capital

Answer 3

Working capital is the payment for the daily running of a business, eg. wages, raw materials, rent and electricity. This has to be reduced so that the business can generate enough revenue to earn a profit.
A way to raise finance is to reduce the amount of money a business holds for day-to-day expenses by keeping it to a minimum.