Raising funds internally is effectively increasing the investment of the firm's existing common shareholders.

Question

Quizplus · Accepted Answer

Raising funds internally means that the firm is using its own retained earnings or profits to finance its operations or expansion, which increases the investment of the existing common shareholders without diluting their ownership or control. Therefore, it is an example of equity financing that benefits the current stockholders by not requiring any external investors or lenders to share the ownership or the profits of the company.

Raising Funds Internally Is Effectively Increasing the Investment of the Firm's