Profits as a Source of Financial Capital

If firms are earning profits (their revenues are greater than costs), they can choose to reinvest some of these

profits in equipment, structures, and research and development. For many established companies, reinvesting

their own profits is one primary source of financial capital. Companies and firms just getting started may have

numerous attractive investment opportunities, but few current profits to invest. Even large firms can

experience a year or two of earning low profits or even suffering losses, but unless the firm can find a steady

and reliable financial capital source so that it can continue making real investments in tough times, the firm

may not survive until better times arrive. Firms often need to find financial capital sources other than profits.

Borrowing: Banks and Bonds

When a firm has a record of at least earning significant revenues, and better still of earning profits, the firm
{"total_pages": 597, "producer": "Prince 14.2 (www.princexml.com)", "uploaded_via": "batch_uploader", "file_type": ".pdf", "creationdate": "2022-12-07T14:15:44-06:00", "creator": "PDFMiner", "batch_upload": true, "upload_timestamp": "2026-02-07T15:24:38.309401", "file_name": "Microeconomics3e.pdf", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "file_size_mb": 26.99, "moddate": "2022-12-07T14:23:05-06:00", "title": "Principles of Microeconomics 3e", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf"}