As a source of finance retained profit is better than other sources. Do you agree with this view? Give reasons for your answer. Can a company grow indefinitely by reinvesting surplus profit?
Answers
Answer:
With the support internal source which is dependable over the external source and also it fails to depend on the investors in the market. On the other hand it has profit control which involves any sort of cost to be incurred and raising the funds in a fine manner. It has no expenses over the prospecturs advertising support. It is more helpful and easy for the customer to collect answer.
Explanation:
Retained earnings are better than other sources of finance because: Retained earnings is a permanent source of funds which an organization can avail of. It enhances capacity of the business to absorb unexpected losses. It does not involve any explicit cost in the form of interest, dividend or flotation cost.
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