Internal Sources of Business Finance

Question 1

Internal Sources

Answer 1

Sources of money from owner or other business income.

Question 2

Owners Funds

Answer 2

Money that is put into business from owners private savings.

Question 3

Owners Funds Advantage

Answer 3

No need to pay interest.

Possession of ownership.

Question 4

Owners Funds Disadvantage

Answer 4

Amount available may be limited

Puts stress on day to day finance of individual

Question 5

Retained Profits

Answer 5

Make profits, owners decide whether they spend it on themselves or the business.

Question 6

Retained Profits Advantages

Answer 6

Internal, no need to repay
Instantly available
Doesn’t incur additional costs
Control is not lost

Question 7

Retained Profits Disadvantages

Answer 7

Limited funds available
Shareholders prefer to see short term returns on investment
Not an option for start up business

Question 8

Sale of an asset

Answer 8

Possessions that they no longer need can be sold for investments.