Retained profit
What Retained profit means in Business GCSE, as defined for AQA, OCR, Pearson Edexcel.
Definitions of Retained profit
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Reference: AQA
Profit kept after tax and dividends and reinvested in the business; it is internal and avoids interest but may be insufficient and has opportunity cost.
An internal source of finance that is the cheapest source, incurring no interest, but may be insufficient for major growth.
An internal source of finance available only to established businesses that have previously generated a surplus.
An internal long-term source of finance.
Profit kept within the business from previous years to reinvest, rather than being distributed to owners/shareholders.
Profit kept within the business to fund future expansion rather than being paid out as dividends.
Topics that use Retained profit
- Human resources (AQA GCSE)
- Sources of finance (AQA GCSE)
- Sources of finance (OCR GCSE)
- Business growth (Pearson Edexcel GCSE)
- Sources of business finance (Pearson Edexcel GCSE)
Related terms
- Trade credit
- Overdraft
- Share capital
- Venture Capital
- Application to context
- Average Rate of Return (ARR)
- Business growth
- Business objectives
Using Retained profit in the exam
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