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प्रश्न
Justify the following statement.
Retained earning is simple and cheapest method of raising finance.
उत्तर
Justification:
- Retained earnings are the earnings of the company which are retained (reinvested) in the business.
- The sum of those profits accumulated over years is re-invested in the business, rather than distributing it as a dividend to shareholders.
- The company can utilize such reserves for financing various projects such as expansion, diversification, etc.
- It is an important source of internal financing. Thus, it is also known as 'Self Financing' or 'Ploughing Back of Profits'.
Thus, it is rightly justified that, retained earnings is the simple and cheapest method of raising finance.
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संबंधित प्रश्न
Answer the question.
Discuss three advantages of plowing hack of profit, from the company’s point of view.
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.
Find the odd one.
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?
Explain any four disadvantages of Retained Earnings.
What are retained earnings?
What are retained profits called "self financing"?
What are retained profits?
Discuss the advantages of retained profits as a source of finance.
Discuss the disadvantages of retained profits as a source of finance.
