question_answer

What is the difference between internal and external sources of raising funds? Explain.

Answer:

Ans.     The differences between internal and external sources of raising funds are summarized in the table given as follows:

Basis	Internal Sources	External Sources
Meaning	Internal sources of capital are those sources that are generated within the business.	External sources of raising funds are those which are outside the business.
Example	Ploughing back of profits, equity shares	Financial institutions, loans from banks, preference shares, debentures, public deposits, lease financing, commercial papers, trade credit, factoring
Reliability	It is more reliable.	It is less reliable.