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Which of the following best matches source of finance to business purpose? (A) Increasing bank overdraft to buy a delivery van (B) Applying for a government grant to pay creditors (C) Using retained earnings to expand into new markets (D) Selling accounts receivable to replace furniture and fittings - HSC - SSCE Business Studies - Question 16 - 2008 - Paper 1
Question 16
Which of the following best matches source of finance to business purpose? (A) Increasing bank overdraft to buy a delivery van (B) Applying for a government grant to... show full transcript
Worked Solution & Example Answer:Which of the following best matches source of finance to business purpose? (A) Increasing bank overdraft to buy a delivery van (B) Applying for a government grant to pay creditors (C) Using retained earnings to expand into new markets (D) Selling accounts receivable to replace furniture and fittings - HSC - SSCE Business Studies - Question 16 - 2008 - Paper 1
Step 1
Using retained earnings to expand into new markets
Answer
Retained earnings are profits that a company has kept for reinvestment in the business rather than distributing to shareholders. This form of financing is often most suitable for long-term projects such as expanding into new markets. Companies typically use retained earnings to fund initiatives that can lead to growth without incurring additional debt or relying on external financing.