In times of recession, retain earnings decline as a percent of internal funds.

Question

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Retained earnings are profits that a company chooses to keep and reinvest instead of paying out as dividends to shareholders. During a recession, companies may experience lower profits and reduced cash flows, which can cause a decline in retained earnings as a proportion of their internal funds. This is because companies may need to use more of their internal funds to cover expenses and maintain operations, rather than retaining earnings for future investments.

In Times of Recession, Retain Earnings Decline as a Percent