After enjoying the increased sales and profits of several popular products,XYZ Inc.plans to expand their production facilities.The firm,a well-known producer of lawn care products,prefers financing this project with a funding source that avoids interest and dividend payments as well as underwriting costs.Which of the following best meets the needs of XYZ Inc.?
A)Retained earnings
B)Common stock
C)Venture capital
D)Debenture bonds

Question

Quizplus · Accepted Answer

Retained earnings are the portion of a company's profits that are kept within the business instead of being distributed as dividends to shareholders. Since XYZ Inc. wants to avoid interest and dividend payments as well as underwriting costs, retaining earnings is the best option. This allows the company to finance their expansion project without incurring additional costs or obligations to external parties.

After Enjoying the Increased Sales and Profits of Several Popular