Your company increases profit, and decides to retain the earnings and reinvest t

Question

Your company increases profit, and decides to retain the earnings and reinvest them in the firm. The money might have been distributed to shareholders, but instead, the funds contribute to the firm's growth. Which of the following statements is TRUE about this internal growth.

a. As with borrowing money, the added retained income is offset by additional liabilities, so current stockholders don't share in the growth.

b. As with an outside investment in the firm, the firm's assets increase, so the current stockholders share in the growth.

c. Because the money is retained, current stockholders own a proportionate share of the company and participate in the company growth.

Explanation / Answer

true statement is B

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.