Question

make a list of three limitations of retained profit​

Answer 1

Answer:

There is imbalanced growth as undistributed profits remain in the same industry.

Since the profits of business fluctuate from time to time, it is an uncertain source of funds.

Excessive retained earnings causes dissatisfaction amongst the shareholders as this reduces the amount of the dividend receivable by them.

Frequent capitalisation of reserves may result in over capitalisation.