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Why are profits ALONE insufficient to finance growth?

Why are profits ALONE insufficient to finance growth?

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A stable business needs capital infusion constantly. When a busienss enters growth phase, it need a large amount of cash to invest in new project or new equipment and R&D. The profits from the company are usually pretty small when compared to the amount of investments needed. Hence they have to go for outside financing. If the company does not invest in growth opportunities at he right time, the opportunities may vanish as someobe else would take them up . A company is doomed if it misses such opportunities. Hence usually companies go for outside debt and equity financing.

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