2.1.1 Internal Finance
Internal Finance - from within the business e.g. retained profit External finance - from outside the business e.g. loans Owner's capital : Personal savings - how much the owner has invested in the business OR the proportion of the business' assets that are owned by the business owner rather than creditors. Assets - Items owned by the business e.g. stock is a current asset that will stay in the business for less than a year and vehicles are long term assets. Creditors - People who the business owes money to e.g. the bank Retained profit - Profit kept within a business from profit for the year to help finance future activities. Profit that remains after tax bills and dividends have been covered. Sale of assets - the sale of a long term or fixed assets. (NOT CURRENT ASSETS) ADVANTAGES OF OWNERS CAPITAL Do not have to repay No interest charges Owner's maintain control Risking own savings can be motivational Do not have to go through a...