Total internal equity finance is equal to:
A)operating profit before tax less depreciation charges less income tax paid less dividend payments.
B)revenue less expenses requiring the use of funds plus funds from operations less income tax paid.
C)operating profit before tax plus depreciation charges less income tax paid less dividend payments.
D)none of the given options.

Question

Quizplus · Accepted Answer

Total internal equity finance, also known as retained earnings, is the profit that a company has generated and kept over time. Therefore, it is calculated as operating profit before tax plus depreciation charges less income tax paid less dividend payments, which is option C. Option A subtracts dividend payments from the calculation, which would result in less internal equity finance. Option B adds funds from operations, which could include external financing, and therefore is not an accurate measure of retained earnings. Option D is incorrect as it does not provide an alternative calculation.

Total Internal Equity Finance Is Equal To