2.1.1 Internal Finance

• Finance

  The management of the investment need to; open, run and grow a business
• Reasons for Raising Finance


  -To pay debts

  -To help a business over a slow trading period

  -To expand using long-term finance eg. loans

  -To start a business using loans or asking family to invest

  -To buy stock using trade credit
• Owner's Capital


  The stake the owner has in the firm represents the net assets. Owner's equity is suitable for sole traders and partnerships
• Retained Profits


  After a year of trading, profits can be reinvested to grow the firm without paying interest, but it cannot be used elsewhere in the business and the firm must have traded for a year
• Sales of Assets


  Selling items owned by the business eg. machinery, factories, and vehicles all firms except start-ups can sell assets for quick cash, but this is not enough for growth and makes the firm look unattractive to investors as it is removed from the balance sheet