what is meant by ploughing back of profits?

It refers to the process of retaining a part of the company's net profits for the purpose of reinvesting in the business itself. In other words, the savings generated internally by a company in the form of 'retained earnings' are ploughed back into the company for diversification of its business. It is actually the amount held back by the entrepreneur after paying a reasonable dividend to the shareholders of the company and these undistributed profits are used by the company to meet its present and future financial requirements.

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To plough back profits is to reinvest the profits into future business activities.

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ploughing back of profits means retained earnings..

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