Ashoka Limited manufacturers electronic toys using high technology. Because of use of this technology quality of toys manufactured by the company is of high quality. Therefore, there is robust sale of toys with corresponding profitability. The company has adopted the policy to retain sufficient portion of profit every year. This has resulted in creation of general reserve with vast funds. In order to use these funds the company undertook hotel business. Since the company did not have required competence for running hotel business, this project flopped incurring lot of loss. Identify the aspect of retained earning with which decisions about going in hotel business is related and explain any three more points of this aspect.
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