Retained Profits

SCS – July 2023 – L3 – Q5b – Sources of Finance

Explain two benefits of increasing long-term capital using retained profits.

Question

When companies retain profits in the business, the increase in the retained profits adds to equity reserves. This view was suggested by SavvyTech plc management team to the board. The Board is not convinced and seek further explanation.

Required:
Explain TWO (2) benefits to the board of directors on what it means to increase long-term capital using retained profits in SavvyTech plc.

Answer

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Tags: Equity, Financial strategy, Long-term Capital, Retained Profits
Level: Level 3

Topic: Sources of Finance
Series: JULY 2023

BMF – May 2024 – L1 – SB – Q3c – Basics of Business Finance and Financial Markets

Benefits and limitations of retaining profits in a business and reasons for limiting earnings retention.

Question

c. When companies retain profits in the business, the increase in retained profits adds to equity reserves.
i. Explain TWO benefits of retaining profits in the business. (4 Marks)
ii. Explain THREE reasons why there could be a limit to the amount of earnings available for retention. (6 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Earnings, Equity, Financial management, Retained Profits
Level: Level 1

Topic: Basics of Business Finance and Financial Markets
Series: MAY 2024

SCS – July 2023 – L3 – Q5b – Sources of Finance

Explain two benefits of increasing long-term capital using retained profits.

Question

Required:
Explain TWO (2) benefits to the board of directors on what it means to increase long-term capital using retained profits in SavvyTech plc.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Equity, Financial strategy, Long-term Capital, Retained Profits
Level: Level 3

Topic: Sources of Finance
Series: JULY 2023

BMF – May 2024 – L1 – SB – Q3c – Basics of Business Finance and Financial Markets

Benefits and limitations of retaining profits in a business and reasons for limiting earnings retention.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Earnings, Equity, Financial management, Retained Profits
Level: Level 1

Topic: Basics of Business Finance and Financial Markets
Series: MAY 2024

Question Tag: Retained Profits

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SCS – July 2023 – L3 – Q5b – Sources of Finance

Explain two benefits of increasing long-term capital using retained profits.

BMF – May 2024 – L1 – SB – Q3c – Basics of Business Finance and Financial Markets

Benefits and limitations of retaining profits in a business and reasons for limiting earnings retention.

SCS – July 2023 – L3 – Q5b – Sources of Finance

Explain two benefits of increasing long-term capital using retained profits.

BMF – May 2024 – L1 – SB – Q3c – Basics of Business Finance and Financial Markets

Benefits and limitations of retaining profits in a business and reasons for limiting earnings retention.

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