(17) "Ploughing back of profit is not possible for every company”-Explain statement.
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For example, a company is not following the policy of ploughing back. It needs further capital for expansion. It will have to issue new shares or raise loans. If the existing shareholders are not in a position to buy new shares in the company these will be issued to some other people.
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instead of distributing all profits as dividend, some part is kept in the form of reserves . If need arise in future then this retained earning are reinvested in business
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This answer is from textbook
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