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Why retained earning is called self …

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Why retained earning is called self financing

Posted by Shruti Gupta 5 years, 2 months ago

CBSE > Class 11 > Business Studies

2 answers

Gaurav Seth 5 years, 2 months ago

Firms usually keep a certain part of the profits earned before distributing dividends to their shareholders. These undistributed profits are retained in the business for future use and are known as retained earnings. Retained earnings
are called self financing as a part of these funds are reinvested in the business.

0Thank You

Harsh Panchal 5 years, 2 months ago

Because a portion of companies net profit after tax and dividend which is not distributed but are retained for investment purpose that is why retained earning is also known as self financing.??

1Thank You

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CBSE > Class 11 > Business Studies