Unit 26 - Internal Finance Flashcards
Def: capital
The money provided by the owner in a business
Def: capital expenditure
Spending on business resources that can be used repeatedly over a time period
Def: internal finance
Money generated by the business or its current owners
Def: retained profit
Profit after tax that is reinvested into the business
Def: revenue expenditures
Spending on a business resources that have already been consumed or will be very shortly
Def: sale and leaseback
Practice of selling assets like property or machinery and leasing them back from buyers
Ways of internal finance
Owners capital
Retained profit
Sale of assets
Advantages and disadvantages of internal finance
Capital is available immediately
Cheap - no interest
Don’t need to involve a third party
Limited
Inflexible - not a wide range of finance options
