Which source of finance is raised from outside the business?

• A. Internal Sources of Finance
• B. External Sources of Finance
• C. Cashflow
• D. Retained Profits

Answer: (B)

Raising money from outside the business is external finance. External sources come from outside the organization, such as bank loans, new investors, issuing shares, or government grants. This contrasts with internal sources, which come from within the business itself, like retained profits or selling assets. Cashflow is about the timing of cash in and out, not a source of funds, and retained profits are money kept from past profits within the business. So the choice that describes funds raised from outside is external sources of finance.