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Sources of finance study guide
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Sources of finance
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Sources of finance: study guide
The portion of a business’s profit that is kept within the company rather than paid out as dividends. Raising capital by selling shares or ownership stakes in the business. Financing obtained by selling shares of ownership in the business
The portion of a business’s profit that is kept within the company rather than paid out as dividends.
Raising capital by selling shares or ownership stakes in the business.
Financing obtained by selling shares of ownership in the business.
Exam practice
- Which of the following is an internal source of finance for a small online service business?
- Explain why a small retailer might prefer an overdraft rather than a fixed-term loan to finance a seasonal sales boost.
- Which finance method is most suitable for a small manufacturer looking to expand production capacity, considering cost, control, and risk?
- An independent retailer wants to launch a new product line but has limited cash flow. Evaluate the advantages and disadvantages of using a bank loan versus equity finance to fund this project.
- An independent retailer wants to expand its store by adding a new product line. Which source of finance is most appropriate for this purpose?
- Evaluate the suitability of a bank loan versus equity investment for an online service business that aims to scale rapidly over the next 12 months.
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