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What is ploughing back of profit …

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What is ploughing back of profit as a source of finance gives any two benifit of it and explain it

Posted by Dolly ?️ 6 years, 11 months ago

CBSE > Class 11 > Business Studies

1 answers

Gaurav Seth 6 years, 11 months ago

It refers to the process of retaining a part of the company's net profits for the purpose of reinvesting in the business itself. In other words, the savings generated internally by a company in the form of 'retained earnings' are ploughed back into the company for diversification of its business. It is actually the amount held back by the entrepreneur after paying a reasonable dividend to the shareholders of the company and these undistributed profits are used by the company to meet its present and future financial requirements.

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