Business Internal Finance

What is the definition of Finance in a business context?

Management of funds needed to run, continue, and grow a business.

What is the definition of Internal Finance?

Capital raised from within the business itself.

Name two common reasons for a business to raise finance.

Cash flow management and business expansion.

How is Owner's Capital defined?

Money invested into the business from the owner(s).

What is a major advantage of Internal Finance regarding ownership?

Owners retain full control of the business.

What is a primary disadvantage of using internal finance?

The amount of capital available is often limited.

What is the definition of Retained Profit?

Profit kept after all costs, taxes, and dividends are paid.

Why is Retained Profit considered a 'free' source of capital?

It carries no interest costs or debt repayment obligations.

Why is Retained Profit unavailable for start‑up businesses?

Start‑ups have not yet generated any profits.

What risk do owners face when using personal funds for finance?

The risk of total capital loss if the business fails.