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Retained Profit
The portion of net profit that a company keeps instead of distributing it to shareholders as dividends.
Sale of Assets
Selling off business assets to raise funds.
Depreciation
The gradual reduction in the value of a fixed asset over time due to wear and tear or obsolescence.
Working Capital Management
The difference between a business's current assets and current liabilities.
Advantages of Internal Finance
Includes no reliance on external debt, no loss of ownership, flexibility in fund usage, and lower financial risk.
Disadvantages of Internal Finance
Includes limited funds available for large investments, opportunity cost, and potentially slower growth.
Opportunity Cost
The cost of forgoing the next best alternative when making a decision.
Financial Independence
Ability of a business to operate without external financial obligations.
Assets
Resources owned by a business that have economic value.
Current Assets
Assets that are expected to be converted into cash within one year.
Current Liabilities
Obligations a business needs to pay off within one year.
Cash Flow
The net amount of cash being transferred in and out of a business.
