Question

What do u mean by internal source financing?

Answer 1

Retained profits/earnings arecalled the internal source offinance for a business for the simple reason that they are the end product of running a business. ... Retained profits canbe defined as the profit left after paying a dividend to the shareholders or drawings by the capital owners.

Answer 2

In the theory of capital structure,internal financing is the name for a firm using its profits as a source of capital for new investment, rather than a) distributing them to firm's owners or other investors and b) obtaining capital elsewhere.