BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Answer. explanation:The extent of retained earnings also influences the financing decision of the firm. Since the firm does not require funds to the extent of re-invested retained earnings, the decision regarding dividend should be taken keeping in view the overall objective of maximising shareholder’s wealth.

Detailed explanation-2: -Which of the following is true of retained earnings? Retained earnings decrease with payment of dividends.

Detailed explanation-3: -Retained earnings are directly impacted by the same items that impact net income. These include revenues, cost of goods sold, operating expenses, and depreciation. The higher the retained earnings of a company, the stronger sign of its financial health.

Detailed explanation-4: -Retained earnings is a permanent source of fund available to an organization. It is an internal source of financing.

Detailed explanation-5: -Retained earnings could be used for funding an expansion or paying dividends to shareholders at a later date. Retained earnings are related to net (as opposed to gross) income because it’s the net income amount saved by a company over time.