Select the incorrect statement concerning retained profits as a source of finance.

Question

Quizplus · Accepted Answer

Retained profits are funds that a company has decided not to distribute to shareholders as dividends but to keep within the company for reinvestment or as a reserve. This decision typically involves less scrutiny compared to issuing shares, which can involve regulatory requirements, underwriting fees, and a need to provide detailed information to potential investors. Therefore, the statement that there is more scrutiny when profits are retained than when shares are issued is incorrect.

Select the Incorrect Statement Concerning Retained Profits as a Source