Financial deficits are created when:
A) profits and retained earnings are greater than the capital-spending requirement.
B) profits and retained earnings are less than the capital-spending requirement.
C) profits and retained earnings are equal to the capital-spending requirement.
D) profits and retained earnings are greater than or equal to the capital-spending requirement.

Question

Quizplus · Accepted Answer

Financial deficits occur when the profits and retained earnings of a company are less than its capital-spending requirement, indicating that the company does not have enough internal funds to cover its investment needs.

Financial Deficits Are Created When