Companies with large expansion plans,called growth companies,prefer to reinvest earnings in the growth of the company rather than distribute earnings back to investors in the form of cash dividends.

Question

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Growth companies prioritize reinvesting earnings into their business in order to expand and grow their operations, rather than paying out cash dividends to investors. This helps them achieve their long-term growth objectives and increase the value of their business.

Companies with Large Expansion Plans,called Growth Companies,prefer to Reinvest Earnings