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RETAINED EARNING

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RETAINED EARNING
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Storyboard Text

  • Dad,tomorrow we are going to learn about retained earning. Can you tell me about it?
  • Sure beta,This is a very intresting topic.
  • What is retained earning?
  • It refers to the portion of the earnings left with the company after distribution of dividend to its shareholders.
  • What are the merits of retained earning?
  • (i) Retained earnings are a permanent source of funds available to an organisation.(ii) It does not involve any explicit cost in the form of interest, dividend or floatation cost.
  • Tell me about its demerits too?
  • (i) Since the profits of business fluctuate from time to time, it is an uncertain source of funds.(ii) There is imbalanced growth as undistributed profits remain in the same industry.
  • Lastly can you please tell me about the features?
  • Sure beta. the features are: COST OF FINANCING,FLOATATION COST, CONTROL AND LEGAL FORMALITIES
  • Yes Dad. Thank you so much for your help. Bye Dad
  • Now go and play. I am sure you will suprise your teacher tomorrow.
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