Internal finance

Question 1

What is internal finace?

Answer 1

Investment that comes from within a business
EG; personal savings(owner capital), retained profit, sale of assets

Question 2

What are the pros and cons to owners capital?

Answer 2

Pros:
- cheaper then loan
- keep control over business
- little delay
Cons:
- owner may not have enough capital

Question 3

What are the pros and cons to retained profit?

Answer 3

Pros:
- no interest to pay
-cheap
-flexible
Cons:
-danger of hoarding cash
-once its used, its gone
-may not be enough

Question 4

What are the pros and cons to sale of assets?

Answer 4

Pros:
- sold quick for cash
- improve efficiency
- all business can sell assets
Cons:
- not all businesses have spare assets
- may not raise enough money
- look less attractive to investors