For the typical small business, the primary source of equity capital for financing growth is:
A)operating profits.
B)outside investors.
C)spontaneous debt financing.
D)retained earnings.

Question

Quizplus · Accepted Answer

Retained earnings are the profits that are not distributed to the owners but are kept within the company for reinvestment. For small businesses, retained earnings are often the primary source of equity capital for financing growth as they may not have access to outside investors or spontaneous debt financing. Operating profits may also contribute to retained earnings, but they are not typically the primary source.

For the Typical Small Business, the Primary Source of Equity