Internal Source Of Finance

Question 1

Owners funds

Answer 1

The money that is put into the business from the private savings of the owners. Many businesses are started using the owners own savings, an inheritance or redundancy pay from previous employer

Question 2

Owner Funds - Advantages

Answer 2

1. No need to pay interest or repay finance

2. Retention of ownership by the individual

Question 3

Owner Funds - Disadvantages

Answer 3

1. Amount available may be limited

2. Puts stress on the day to day finance of the individual

Question 4

Retained Profits

Answer 4

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

Question 5

Retained Profits - Advantages

Answer 5

1. No need to repay
2. Instantly available
3. No additional costs
4. Control isn’t lost

Question 6

Retained Profit - Disadvantages

Answer 6

1. Limited funds available
2. May prefer to see short term returns
3. Not an option for a start up business

Question 7

Sale Of Asset

Answer 7

Some businesses will have possession that they no longer need. They can be sold to raise money needed for other investments