No interest charges
Available immediately
Only available up to the amount already accumulated by the business and therefore avoids debt
No loss of ownership (control)
1 of 6
Disadvantages of Retained Profit
Amount available may be limited
Reduces payments to shareholders which may cause dissatisfaction
Once used it is not available for alternative purposes
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Advantages of Net Current Assets
Encourages the business to manage cash flow effectively
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Disadvantages of Net Current Assets
Can put pressure on customers as shorter credit terms are offered and this negatively affects relationships with suppliers if longer credit terms are negotiated.
Lower stock holdings can affect the firm's ability to meet customer needs
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Advantages of Sale of Assets
No interest charged
Reduces capital tied up in assets, releasing it for other purposes
Can mean disposing of an asset no longer of use to the business
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Disadvantages of Sale of Assets
It is likely that the amount received is not a true reflection of the value of the asset.
Can increase costs in the long run if an asset needs to be leased back
6 of 6
Other cards in this set
Card 2
Front
Disadvantages of Retained Profit
Back
Amount available may be limited
Reduces payments to shareholders which may cause dissatisfaction
Once used it is not available for alternative purposes
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