Question

Mention the merits and demerits of ‘Retained Earnings’ as a source of long-term finance

Answer 1

Hope this answer help you and also it make me brainlist

Long Term Loan Advantages:

Long term loans minimize time spent saving for investments and investors are able to realize potential earnings sooner to help offset the cost. Although keeping some cash on hand is important to mitigate unexpected expenses, saving large lump sums is inefficient.

Answer 2

Explanation:

Advantages of Retained Earnings

• These earnings are readily available, and the firm is not required to seek help from the shareholders or lenders in case of urgency of funds.

• The use of retained earnings reduces the cost of issuing the external equity and also eliminates the losses incurred on under-pricing.