If a company needs cash for emergencies, it typically uses the money in retained earnings.

Name: If a company needs cash for emergencies, it typically uses the money in retained earnings.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Retained earnings are profits that a company has chosen to reinvest in the business rather than distribute to shareholders as dividends. While they represent a source of internal funding, companies typically maintain separate cash reserves or lines of credit for emergency liquidity needs.

If a Company Needs Cash for Emergencies, It Typically Uses