Retained profits Flashcards
1
Q
Retained Profits
A
Businesses make profits, the owner can decide to spend these on themselves or to use same or all of the profit top expand and improve the business.
2
Q
Retained Profits Advantages
A
- Internal, therefore no need to repay.
- Instantly available.
- Does not incur additional costs such as interest payments.
- Control is not lost.
3
Q
Retained Profits Disadvantages
A
- May limit funds available.
- Shareholders may prefer to see short term returns on the investments.
- Not an option for a start up business.
