If ABC uses retained profit to fund expansion, what is a key characteristic?

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Multiple Choice

If ABC uses retained profit to fund expansion, what is a key characteristic?

Explanation:
Using retained profits means funding expansion from money the business has already earned and kept, rather than raising new funds from outside. The standout feature of this approach is that there is no external financing and no interest payments, since the money comes from the company’s own accumulated profits. This also keeps ownership unchanged because no new shares are issued to external investors. It’s a self‑funded path, but it depends on having enough profits available to support the expansion, unlike methods that involve borrowing or inviting new investors.

Using retained profits means funding expansion from money the business has already earned and kept, rather than raising new funds from outside. The standout feature of this approach is that there is no external financing and no interest payments, since the money comes from the company’s own accumulated profits. This also keeps ownership unchanged because no new shares are issued to external investors. It’s a self‑funded path, but it depends on having enough profits available to support the expansion, unlike methods that involve borrowing or inviting new investors.

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