Retained earnings may be a better source of funds than issuing stocks or bonds because management does not have to account for their effectiveness this way.

Question

Quizplus · Accepted Answer

Retained earnings do not require management to account for their effectiveness in the same way that issuing stocks or bonds does. This is because retained earnings are profits that have already been earned by the company and are being reinvested, whereas issuing stocks or bonds involves raising new capital from investors and requires greater transparency and accountability.

Retained Earnings May Be a Better Source of Funds Than