An entrepreneur reinvests part of the profit into the enterprise. What thinking does this show?
Answer and explanation
Correct answer: Growth and stability thinking
Reinvestment means using part of earned profit to strengthen the business, for example by buying equipment, improving quality, expanding capacity, training workers, or maintaining working capital. It can support future growth and stability instead of distributing all profit immediately. Reinvestment is not the same as avoiding profit; it is a deliberate choice to use profit for productive business purposes.
Frequently asked questions
What is the correct answer to this question?
Growth and stability thinking
Why is this the correct answer?
Reinvestment means using part of earned profit to strengthen the business, for example by buying equipment, improving quality, expanding capacity, training workers, or maintaining working capital. It can support future growth and stability instead of distributing all profit immediately. Reinvestment is not the same as avoiding profit; it is a deliberate choice to use profit for productive business purposes.
Which subject and chapter does this question cover?
This is a Class 11 Business Studies question. Chapter: Sources of Business Finance. Topic: Owner’s Funds.
