When a firm uses its own funds to self- finance an investment, the operating profit exceeds the taxable profit.

Question

Quizplus · Accepted Answer

When a firm uses its own funds to self-finance an investment, the operating profit and taxable profit are not directly affected by the source of financing. Operating profit is determined by the firm's core business operations, while taxable profit is calculated after accounting for allowable deductions and expenses. The decision to self-finance does not inherently cause operating profit to exceed taxable profit.

When a Firm Uses Its Own Funds to Self- Finance