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Finance (Internal (Types ((1) Owner's investment (Advantages…
Finance
Internal
Definition
Finances raised within the business/ organisation.
Types
(1) Owner's investment
Disadvantage
There is a limit to the amount the owner can invest
Advantages
Doesn't have to be repaid
No interest is payable
(2) Retained Profits
Disadvantages
Not a available to a new business
Business may not make enough profit to plough back
Advantages
Doesn't need to be repaid
No interest is payable
(4) Sale of fixed assets
Disadvantages
Can be a slow method of raising finance
Some businesses are unlikely to have surplus assets to sell
Advantage
Good way to raise finance from an asset that is no longer needed
(3) Sale of stock
Disadvantage
The business will have to take a reduced price for the stock
Advantages
Quick way to raise finance
By selling off stock will reduce the costs associated with holding them
(5) Debt collection
External
Definition
Finances raised outside of the business/ organisation.
Types
Definition
Finance refers to money the business needs to find to pay for it's activities.
Time