Question

How are preference shares external sources of finance?​

Answer 1

Answer:

Internal Source of Finance:

1. Retained Equity Earnings:

This implies retaining the earnings of the shareholders for internal reinvestment. Every rupee retained is a rupee with-held from distribution to existing shareholders. While doing so, management must do something to maintain the interest of shareholders.

Explanation:

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Answer 2

Answer:

Explanation:

If a business needs more financial resources and is unable to obtain the money it needs from domestic sources, it may seek external funding. There are two types of financing from external sources bank loans and equity.