Internal Source of Short Term Finance

Question 1

Working Capital

Answer 1

Reducing trade credit period, reducing the ammount of stocks held, delaying payments to suppliers.

Question 2

Retained Profit

Answer 2

Profit that is retained by the business and not returned to the owners. Advantage: Cheap, no interests, dividends or administration fees. Disadvantage: If profit is used by the business, it cannot be returned to the owners.

Question 3

Sales of Assets

Answer 3

An established business may be able to sell some unwanted assets to raise finance.