Alpha Inc. saw an increase in profits in the previous year following which the management decided to reinvest its earnings. These retained earnings will be used to:
A) meet the company's long-term financial needs.
B) meet the company's short-term financial needs.
C) pay the owners a dividend.
D) increase the liquid assets of the company.

Question

Quizplus · Accepted Answer

Retained earnings are typically reinvested in the company to meet long-term financial needs, such as funding expansion projects or paying off long-term debt.

Alpha Inc Saw an Increase in Profits in the Previous Year