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Ploughing back of profit

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Ploughing back of profit

Posted by Johnson Verghese 5 years, 9 months ago

CBSE > Class 11 > Business Studies

1 answers

Yogita Ingle 5 years, 9 months ago

Ploughing back of profits means investing “part of business profits” in the business. We know that generally firms do not distribute the whole of profits as dividend. They keep a part of it to use in business.
The part of profit is not distributed is called retained profit. Ploughing back of profits is the most convenient and economical method of financing. It makes the company strong and increases capital formation.

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