2.1 - raising finance

Question 1

internal sources of finance

Answer 1

. owner’s capital
. sale of assets
. retained profits

Question 2

positives of owner’s capital

Answer 2

. no interest payments
. can be used for long term investments

Question 3

negatives of owner’s capital

Answer 3

. is there enough?
. the owner may spend elsewhere

Question 4

positives for retained profit

Answer 4

. no interest payments
. flexibility on how it’s used

Question 5

negatives of retained profit

Answer 5

. is there enough?
. opportunity cost

Question 6

positives of sale of assets

Answer 6

. no interest payments
. reduce operating costs (day to day costs)

Question 7

negatives of sale of assets

Answer 7

. what if the asset is needed
. assets can depreciate