section D

What is the feature of Retained Profit?

Net profit kept in the business after tax/dividends to fund future growth.

What is the advantage of Retained Profit?

Free of interest charges, available immediately, avoids debt, and retains full ownership control.

What is the disadvantage of Retained Profit?

Amount may be limited, reduces shareholder dividend payouts, and once spent is unavailable for other needs.

What is the feature of Net Current Assets?

Working capital (Current Assets - Current Liabilities) used to fund daily operations.

What is the advantage of Net Current Assets?

Encourages effective internal cash flow control with zero interest charges.

What is the disadvantage of Net Current Assets?

Pressuring debtors or delaying creditors strains business relationships, and low stock risks lost sales.

What is the feature of Sale of Assets?

Selling owned items of value (unused machinery, property) to raise cash.

What is the advantage of Sale of Assets?

Releases capital tied up in idle assets, provides quick liquidity, and carries no interest.

What is the disadvantage of Sale of Assets?

Resale value may be lower than true worth, and leasing back assets increases long-term overhead costs.

What is the feature of Owner's Capital?

Personal savings invested into the business by sole traders or partners.

What is the advantage of Owner's Capital?

No interest charges or debt repayments, and demonstrates high owner commitment to lenders.

What is the disadvantage of Owner's Capital?

Capital available is limited by personal wealth, and uneven partner contributions can cause friction.

What is the feature of a Bank Loan?

Fixed sum borrowed for a set period and specific purpose, repaid with interest.

What is the advantage of a Bank Loan?

Predictable monthly repayments aid budgeting, and ownership control is completely retained.

What is the disadvantage of a Bank Loan?

Interest is charged regardless of profit, rates fluctuate, and often requires collateral security.

What is the feature of Crowd-Funding?

Raising small investments from a large online crowd of individuals.

What is the advantage of Crowd-Funding?

Accesses a large investor pool, serves as marketing exposure, and involves no bank interest.

What is the disadvantage of Crowd-Funding?

Often involves giving up equity rewards, and carries no guarantee of reaching the funding target.

What is the feature of a Mortgage?

Specialized long-term loan (typically 25 years) secured against land or premises.

What is the advantage of a Mortgage?

Raises large capital sums repaid over a long period while retaining business control.

What is the disadvantage of a Mortgage?

High total interest costs, variable rate risks, and risk of property repossession if missed.

What is the feature of Venture Capital?

Investment from an experienced investor in exchange for an equity stake and seat on the board.

What is the advantage of Venture Capital?

Provides substantial capital alongside expert business advice, and is willing to fund high-risk ventures.

What is the disadvantage of Venture Capital?

Requires surrendering a significant equity share, and risks strategic conflicts with the investor.

What is the feature of Debt Factoring?

Selling unpaid trade debts to a factor company for an immediate cash percentage.

What is the advantage of Debt Factoring?

Accelerates cash inflow instantly, and the factor company assumes bad debt collection risks.

What is the disadvantage of Debt Factoring?

The business receives less than 100% of the debt value (reducing profit), and factor collection can alienate clients.

What is the feature of Hire Purchase?

Paying for an asset in regular instalments while using it; ownership transfers on the final payment.

What is the advantage of Hire Purchase?

Avoids upfront lump-sum costs, spreads asset expenditure, and budgeting is predictable.

What is the disadvantage of Hire Purchase?

Total cost paid is higher than buying outright, and the asset is not legally owned until the final payment.

What is the feature of Leasing?

Renting an asset in regular instalments; ownership remains with the supplier throughout.

What is the advantage of Leasing?

Maintenance/repairs remain the supplier's responsibility, and avoids large upfront capital outlays.

What is the disadvantage of Leasing?

Total cost paid over time is higher, and the asset is never owned, requiring perpetual payments.

What is the feature of Trade Credit?

Supplier agreement allowing goods/services to be received now and paid for later (e.g., 30-60 days).

What is the advantage of Trade Credit?

Delays cash outlay, supports liquidity, and incurs zero interest charges if paid on time.

What is the disadvantage of Trade Credit?

Misses out on early payment cash discounts, and failure to pay damages supplier relationships.

What is the feature of Grants?

Lump sums provided by government bodies or trusts for specific purposes (job creation, green R&D).

What is the advantage of Grants?

No repayment required, zero interest charges, and no loss of equity or control.

What is the disadvantage of Grants?

Lengthy application process, and subject to strict qualifying conditions altering business operations.

What is the feature of Donations?

Voluntary financial gifts given to charities, non-profits, or social enterprises.

What is the advantage of Donations?

Carries no repayment obligations, interest charges, or loss of organizational control.

What is the disadvantage of Donations?

Unpredictable, highly unreliable, and usually limited to small monetary amounts.

What is the feature of Peer-to-Peer Lending?

Online platform connecting individual lenders directly with business borrowers.

What is the advantage of Peer-to-Peer Lending?

Interest rates can be lower than traditional bank loans, and quick online approval.

What is the disadvantage of Peer-to-Peer Lending?

Funding amounts available may be limited, and repayment terms are often short.

What is the feature of Invoice Discounting?

Offering percentage discounts to trade customers who pay invoices early.

What is the advantage of Invoice Discounting?

Encourages faster cash collection without incurring bank debt or debt factoring fees.

What is the disadvantage of Invoice Discounting?

Reduces the overall gross profit margin earned on sales.