Sources of Finance Y12

What is an advantage of a business using owner's capital as a source of finance?

• Very low rate of interest

• It will bring new skills to the business

• It doesn't need repaying

• Repayment is always spread over a period time

What is an advantage of a bank loan?

• There will be little or no interest
• You can pay in smaller installments
• They are quick and easy 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
• They are quick and easy to arrange
• 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

• Owner's capital

Which of these sources of finance is likely to charge the most interest?

• Trade credit

• Retained profit

• Bank loan

• Overdraft

What source of finance is not available to unlimited companies?

• Taking on a new partner

• Trade Credit

• Share Issue

• Retained Profit

What does internal source of finance mean?

• A source from within a business

• A source from outside a business

What is an example of an internal source of finance?

• Owner's fund

• Leasing

• Hire purchase

• Trade credit

What is an example of internal source of finance?

• Owners' funds

• Retained profits

• Sales of assets

• Bank loan

What is an advantage of Retained profit

• satisfaction

• No financial cost

• Shareholders can get more dividend

• You need to pay interest