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प्रश्न
Answer the question.
Discuss three advantages of plowing hack of profit, from the company’s point of view.
उत्तर
Ploughing back of profits refers to the process of retaining a part of the net profit year after year and reinvesting the same in business.
There are some advantages of ploughing back of profits are :
(i) The company can undertake its plans for expansion, growth and modernization without bothering about conditions in the capital market.
(ii) Ploughing back of profits add to the financial strength and creditworthiness of the company.
(iii) Reserves created by ploughing back of profits can be used to stabilize the rate of dividend on equity shares.
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संबंधित प्रश्न
What has retained earnings? Explain any two of its merits and two of its demerits.
Select the correct answer from the options given below and rewrite the statement.
Retained earnings are ______ source of financing.
Write a word or a term or a phrase that can substitute the following statement.
The policy of using undistributed profit for the business.
Answer in one sentence.
What are retained earnings?
Correct the underlined word and rewrite the following sentence.
Retained earnings is an external source of finance.
Explain the following term/concept.
Ploughing back of profit
Study the following case/situation and express your opinion.
The Balance-sheet of a Donald Company for the year 2018-19 reveals equity share capital of Rs. 25,00,000 and retained earnings of Rs. 50,00,000.
- Is the company financially sound?
- Can the retained earnings be converted into capital?
- What type of source retained earning is?
What is retained earnings? Explain Determinants of retained earnings.
What are retained earnings?
What are retained profits?
