Internal Sources of Finance
- Created by: lisamurdock
- Created on: 15-12-20 21:23
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- Internal Sources of Finance
- Short-term
- Sale of Inventory
- Money that comes from selling off unsold inventory
- Quick way of raising finance
- Business will have to take a reduced price for the inventory
- Debt Collection
- Collecting the money owed to the business
- No additional cost in getting this finance, it's part of the businesses' normal operations
- There is a risk that debts owed can go bad and not be repaid
- Sale of Inventory
- Long-term
- Owner's Investment
- Money which comes from the owner/s own savings
- Doesn't have to be repaid
- There's a limit to the amount an owner can invest
- Owner's Investment
- Medium-term
- Sale of Fixed Assets
- Money comes from selling fixed assets, eg machinery that's no longer needed
- Some businesses are unlikely to have surplus assets to sell
- Good way to raise finance from an asset that is no longer needed
- Retained Profits
- When the profits made are reinvested in the business
- Doesn't have to be repaid
- Business may not make enough profit to reinvest
- Long-term
- Owner's Investment
- Money which comes from the owner/s own savings
- Doesn't have to be repaid
- There's a limit to the amount an owner can invest
- Owner's Investment
- Sale of Fixed Assets
- Short-term
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