internal financing

The business decides to pay the investments of the firm with their own profits.

When a business company generates profits, it has to decide how to distribute that profits. The business company has many option.
One of them is to distribute between the owners who invested in this company. They are the owners of a part of the enterprise. As a result, they receive dividens periodically (they receive a quenatity money for each share which had been bought by shareholders).

Other reason would be to obtain capital from others organization (external financing).

However we are talking about internal financing. Consequently, we have decided this to use the profits to develop a new investment. 

Why have we decided this? Because it's cheaper than external financing ( there aren't transactions costs or taxes which have a relation with the paid of dividends). Although, not everything is advantages because it isn't flexible and the capital incrcease is not possible; between other resasons.

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