P4 describe the internal and external sources of financing for a selected company Internal sources of financing Retained profits: Retained profits are profits that are retained by the company to be used in future investment projects. This is a cheap source of financing as it does not require interest payments. Sports Direct will make money from the sale of its products to a member of the public. If Sports Direct doesn't make enough retained profits, shareholders will be unhappy. Savings: Savings is what a business will get by not spending a lot of money on goods or items that it needs, even if a business goes bankrupt then it can go. to his savings and takes things away to help him pay things off. Sports Direct will save money by putting it into their savings account, so when the company runs out of money they can go there and withdraw money to help them, even if Sports Direct increases prices they will save money because they don't have any to buy back all the goods. External financing sources: Overdraft: A flexible, short-term borrowing method. It allows you to withdraw more money from your account than you have. They usually have higher interest rates than a loan, but can only be used when needed. Sports Direct may need to use an overdraft because they may need extra money to buy a certain type of sports equipment or to be able to buy more shares because they don't have that much money to start with. Loan: Allows individuals and businesses to borrow a fixed sum of money. The money must be repaid on a fixed maturity (monthly) and at a fixed interest rate for a certain period of time. Sports Direct will use a loan when they want to build a new store so they can pay for the land they want... mid-paper... n, repaying VC investors is not necessarily an obligation as it would be for a bank loan. Rather, investors take on the risk of the investment because they believe in the company's future success. Cons: Securing a VC deal can be a difficult process due to the accounting and legal costs a company incurs. The start-up must also cede part of the ownership stake to the VCCompany that invests in it. This translates into a partial loss of autonomy which sees venture capitalists involved in decision-making processes. Venture capital deals also come with stipulations and restrictions in the composition of the start-up's management team, employee compensation, and other factors. Additionally, with the VC firm literally invested in the company's success, all business operations will be under constant scrutiny. The loss of control varies depending on the terms of the VC agreement.