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Questions
What are retained profits?
Briefly explain the concept of retained profits.
Briefly explain the following source of finance.
Retained profits
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Solution
Retained profits refer to the profits that have not been distributed as dividends but have been kept for use within the business. These profits are usually retained in the form of general reserves or retained earnings, which can be used for various purposes, including business expansion, purchasing new assets, research and development, debt repayment, or as a financial cushion during economic downturns.
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