Yes, we agree. Retained earnings are better than other sources of finance because:
- Retained earnings is a permanent source of funds which an organization can avail of.
- It enhances capacity of the business to absorb unexpected losses.
- It does not involve any explicit cost in the form of interest, dividend or flotation cost.
- It may increase the process of equity shares of a company.
- There is a greater degree of operational freedom and flexibility as the funds are generated internally.