Answer:
Following are the merits and demerits of retained earning.
Explanation:
Overall, retained earning has very few demerits compared to merits.
Merits: It helps to reduce the cost of external equity. It helps to eliminate the negative effects of under-pricing. It also helps to keep the same ownership structure.
Demerits: It is an improper way of utilising the remaining funds and it can be misused by the management.
