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Internal sources of finance: This is where the business has funds…
Internal sources of finance: This is where the business has funds available within
Sale of assets
Advantages
No interest charges
Reduces capital
Disadvantages
Definition
The compensated distribution of valuable property that can be tangible or intangible. In a typical business or private transaction involving a sale of assets, the seller gains ownership of some form of cash or its equivalent, while the buyer obtains ownership of the asset.
Net current assets
Definiton
the capital of a business which is used in its day-to-day trading operations, calculated as the current assets minus the current liabilities.
Disadvantages
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
Advantages
Encourages the business to manage
cash flow effectively
Retained profit
Definition
The retained earnings of a corporation is the accumulated net income of the corporation that is retained by the corporation at a particular point of time, such as at the end of the reporting period.
Disadvantage
Amount available may be limited
Reduces payments to shareholders
which may cause dissatisfaction
Once used it is not available for
alternative purposes
Advantage
No loss of ownership (control)
business and therefore avoids debt
already accumulated by the
Only available up to the amount
Available immediately
No interest charges