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Business Studies

Retained Earnings

As the profit...

Question

As the profits of business are fluctuating, ___ is an uncertain source of funds.

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For a manager what are the importance of financial planning:

1. Owners funds are the source of permanent capital

2. Helps in forecasting situations that are probable in the future

3. Helps in avoiding business shocks and surprises

Q. Funds invested by the owner of a business are known asfunds.

Retained earnings is a temporary source of funds available to an organization.

Q. Mehta Corporation, a company dealing in electronics is planning to expand their business on account of growing demand of consumers? electronics. So the company requires additional funds. The finance manager Mansi reported that company is not in a position to bear extra burden of explicit cost and equity share holders insisted not to issue more shares as there is risk of losing control. On the basis of the given information about Mehta Corporation answer the following questions:
(a) Suggest a source of owners fund most suitable for the company.
(b) State any two merits of source of fund chosen in part (a) above.

Factoring as the source of funds is flexible.

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Retained Earnings

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