When retained earnings are not enough to meet their long-term funding needs, businesses may be able to raise funds by selling common stock. Long-term funding can be defined as any financial tool with maturity going beyond one year (such as bank loans, bonds, leasing and other forms of debt finance), and public and private equity instruments.
What is a retained earnings?
Retained earnings are the total of profit an establishment has left over after paying all its direct costs, indirect costs, income taxes and its dividends to shareholders.
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