Maharashtra State BoardHSC Commerce 12th Board Exam
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Explain the following term/concept. Ploughing back of profit - Secretarial Practice

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Short Note

Explain the following term/concept.

Ploughing back of profit

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Solution

(a) Retained earnings are the earnings of the company which are retained (reinvested) in the business. The sum of those profits accumulated over years is re-invested in the business, rather than distributing it as a dividend to shareholders.
(b) It is the simple and cheapest method of raising funds. It is an important source of internal financing. Thus, it is also known as 'Self Financing' or 'Ploughing Back of Profits'.

Concept: Sources of Owned Capital - Retained Earnings
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APPEARS IN

Balbharati Secretarial Practice 12th Standard HSC Maharashtra State Board
Chapter 2 Sources of Corporate Finance
Exercises | Q 2. 3. | Page 37
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