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Vlad1618 [11]
2 years ago
14

4. explain the main advantage of retained profits as a source of finance

Business
1 answer:
Rom4ik [11]2 years ago
5 0

Answer:

The classic explanation of the advantages of high retained profit is that they: increase stock value. assure corporate stability. provide funds for research and expansion without increasing corporate debt.The portion of profits not distributed among the shareholders but retained and used in business is called retained earnings. It is also referred to as ploughing back of profit. This is one of the important sources of internal financing used for fixed as well as working capital.

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