When a corporation forgoes paying a dividend to expand its business, it is engaging in
A) internal finance.
B) external finance.
C) both of the above.
D) neither of the above.

Question

Quizplus · Accepted Answer

When a corporation uses its own earnings to fund expansion rather than distributing these earnings to shareholders in the form of dividends, it is engaging in internal finance. This approach involves reinvesting profits back into the business.

When a Corporation Forgoes Paying a Dividend to Expand Its