Question 2(b)
[Maximum number: 3]
Explain one external source of finance for a business.
CAIE A-Level Business 5.2.2 Internal and External Sources of Finance
Practise distinguishing internal from external finance and analysing the advantages and disadvantages of grants, overdrafts, retained earnings, trade credit, equity and loans.
How this is tested
- classify the source by whether funds arise inside the business or from an outside provider
- analyse a benefit through cost, flexibility, repayment or retained control and apply it to the case
- analyse a drawback through interest, security, dilution, restricted use or supplier relationships