__________ expansion resulting from the gradual increase in the activities of the concern. The concern may expand its present production capacity by adding more machines or by replacing old machines with the new machines with higher productive capacity.
Answer & explanation
Correct answer: option 1
Internal expansion results from the gradual increase in the activities of the concern. The
concern may expand its present production capacity by adding more machines or by
replacing old machines with the new machines with higher productive capacity. The
internal expansion can also be undertaken by taking up the production of more units or by
entering new fields on the production and marketing sides. Internal expansion may be
financed by the issue of more share capital, generating funds from old profits or by
issuing long–term securities. The net result of internal expansion is the increase in
business activities and broadening the present capital structure.