Theme 2

• Internal finance

  money generated by the business or its current owners
• Capital

  Money provided by the owners of a business
• Capital expenditure

  Spending on business resources that can be used repeatedly over a period of time
• Revenue expenditure

  spending on business resources that have already been consumed or will be shortly
• Owners capital

  Owners provide money from their own personal resources to the business

  -free source of finance that doesn’t incur interest

  -owners could lose their personal investment

  -limited to the amount of savings/ personal resources the owner possesses
• Retained profit


  These are profits after tax that are reinvested back into the business and not returned to the owners

  -does not have to be paid back

  -no interest

  -cash readily available

  -reduces business savings

  -shareholders may have reduced dividends
• Sale of assets

  when a established business may sell unwanted or under-utilised assets to raise finance

  -saves paying costs on assets which are not used

  -lose the benefit of the asset