Profit Reinvestment
Plowing back company profits into business rather than distributing to shareholders.
Real World
Amazon famously reinvested all its profits for years into warehousing, logistics, and AWS infrastructure rather than paying dividends, funding explosive growth at the cost of short-term shareholder returns.
Exam Focus
In 'justify' questions, link profit reinvestment to the firm's stage of growth — it is most appropriate for expanding businesses with high capital needs.
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