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Sources of Capital (Internal finance (Retained profit (Profit that is kept…

- - - - advantages : efficient management of cash is good business practice
      - Disadvantages : Money is not always available
  - - - Advantages : Money in the bank for times when things go wrong
      - Disadvantage : danger of holding cash
  - - - advantages : It can be enable business to release large sums of money
      - Disadvantages : The firm loses the use of the assest
- - - - advantages : trade credit is interest-free and easily available
      - Disadvantages - Exchanges flexibility, banks charge high interest rates. Overdrafts are very expensive because of this
    - - Advantages - Provides business with quick access to funds
        Firm does not have to worry about collecting debt
      - Disadvantages - Firm may not receive 100% of debt
    - - Paying with more than you have, often resulting in negative amounts of money. Has to pay back soon.
      - Advantages: able to have a more flexible amount of money to spend without worrying
  - - - Advantages - Lower initial capital requirement
      - Disadvantages - Cost of leasing is usually higher than asset
    - - Money that does need to be repaid often gives to new business to encourage them
      - Advantages - Cheap or free source of funds
      - Disadvantages - Only available for specific types of business or parts of a country
    - - Advantages - Firm owns asset once all payments have been completed
      - Disadvantages - Firm is usually responsible for maintenance
    - - Advantages - One of the few sources of finance available to start-up business
      - Disadvantages - Firms have to share ownership with venture capitalists
    - - When business use sale and leaseback to resolve short term cash flow crisis.
        
        Advantages : The firm retains use of the asset
        
        Disadvantages - Cost of leasing asset back will be high
    - - Advantages - Quick and easy to arrange
      - disadvantages : depending on the interest rate and amount loaned
    - - Long-term loan to a limited company. Has fixed interest rates
      - Advantages - Provides source of long-term finance
      - Disadvantages - Only available to large limited companies