Internal Finance

What is Internal Finance?

Finance raised from within a business itself, without borrowing from or issuing shares to any outside party. The three internal sources are the owner's own savings invested in the business, profit retained rather than distributed to owners, and the proceeds of selling assets the business already owns. Internal finance carries no interest and no repayment obligation, but it is limited in amount and has an opportunity cost.

This definition is part of the Financial Information and Decisions chapter in Cambridge O Level Business Studies.

Concepts related to Internal Finance

• retained profit
• Opportunity Cost
• sale of assets