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What is the importance of saving and reinvestment in business?

Answer and explanation

Correct answer: Funds remain available for growth and future needs of the enterprise

Retaining part of the earnings gives an enterprise funds for working capital, equipment, expansion, emergencies, and future opportunities. Reinvestment can improve capacity or quality, while savings can reduce dependence on sudden borrowing. It does not require spending all profit immediately, automatically increase debt, or reduce customers. Thus, option A states the sound financial benefit.

Related tags

SavingReinvestmentGrowthOwner’s FundsOwner S FundsSources Of Business FinanceBusiness StudiesClass 11 Mcq

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