Business Finance - JC1

What does external mean?

• A source from within the business
• A source from outside the business

What does internal mean?

• A source from within the business
• A source from outside the business

Which is an example of an internal source of finance?

• Owners' Funds

• Venture Capital

• Overdraft

• Trade credit

Which is an example of an external source of finance?

• Owners' Funds
• Hire Purchase
• Retained profits
• Sale of assets

Which is an example of an external source of finance?

• Owners' Funds

• Sale of assets

• Retained profits

• Bank loan

What is an advantage of owners' funds?

• There will be little or no interest
• You can pay in smaller installments
• They take a long time to arrange
• You don't have to pay it back

What is an advantage of an overdraft?

• There is never interest

• You can pay in smaller installments

• Useful for relatively small sums and short term finance

• You don't have to pay it back

What type of finance involves less profit going to the owners?

• Retained profit

• Sale of assets

• Overdraft

• Bank loan

Short Term sources of finance usually require money to be repaid within.....

• 1 week

• 1 month

• 6 months

• 1 year

Which of the following are DISADVANTAGES of selling shares as a source of funds? (select as many as appropriate)

• It means limited liability for the owners

• Dividends need to be paid to shareholders

• Large sums of money can be raised

• Does not apply to Partnerships or Sole Traders