Internal sources:

• What are internal sources of finance?

  Funding from within the business
• What role does working capital play in a business?

  Finances day-to-day operations
• What is an advantage of using retained profit as a source of finance?

  No interest payments
• Why is effective working capital management important for a business?

  Ensures liquidity
• What are the two main internal sources of finance?

  Retained earnings, working capital
• What are retained earnings used for in a business?

  Fund operations and investments
• What is a disadvantage of using retained earnings as a source of finance?

  Reduced dividends
• What is a benefit of effective working capital management?

  Improves liquidity
• What do accounts receivable represent in working capital?

  Amounts owed by customers
• Working capital can be used for immediate expenses.

  True
• Selling unused assets releases capital quickly
• What is the definition of retained earnings as a source of finance?

  Profits kept by the company
• Working capital is the difference between current assets and current liabilities.


  True
• Internal sources of finance are immediately available for urgent needs.


  True
• Retained earnings are profits kept by the company after paying taxes and dividends.


  True
• Internal sources of finance come from within the business
• Retained earnings may not be sufficient for large investments.


  True
• Internal sources of finance may impact other areas of the business, such as reducing dividends.


  True
• Steps to manage working capital effectively:

  1️⃣ Manage inventory levels

  2️⃣ Control cash flow
• Retained earnings are immediately available for use by the business.


  True
• Match the component of working capital with its description:

  Cash ↔️ Money held in the business account

  Inventory ↔️ Raw materials and finished goods

  Accounts Receivable ↔️ Amounts owed to the business by customers
• Cash is considered a component of working capital.


  True
• What is one benefit of effective working capital management?

  Funds day-to-day operations
• What is one advantage of retained profit as a source of finance?

  No interest payments
• Working capital is managed through effective inventory and cash flow.

  True
• What is one disadvantage of using retained earnings?

  Reduced dividends
• Internal sources of finance incur no interest charges
• Internal sources may not provide enough funding for large-scale investments
• The main internal sources of finance are retained earnings and working capital
• Match the source of finance with its description:

  Retained Profit ↔️ Profit kept by the company after taxes and dividends

  Sale of Assets ↔️ Selling unused or underutilized assets
• What is a disadvantage of selling assets as a source of finance?

  Lose use of asset
• Retained profit is available immediately and requires no interest payments
• Retained earnings increase business value
• Retained earnings do not require interest payments
• Working capital is the difference between current assets and current liabilities
• Working capital is the difference between a business's current assets and its current liabilities
• Effective working capital management is crucial for maintaining liquidity
• Match the internal source of finance with its description:

  Retained Profit ↔️ Profit kept after taxes

  Sale of Assets ↔️ Selling unused assets
• Why might internal sources of finance be insufficient for large investments?

  They may be limited
• Retained earnings incur no interest payments