What is a potential benefit of using retained earnings as a source of capital?

Using retained earnings as a source of capital has several advantages, one of which is that it does not incur interest costs. When a company utilizes retained earnings, it is effectively using its accumulated profits that have been reinvested in the business rather than distributed to shareholders as dividends. This means that the company does not have to pay interest, unlike external financing methods such as loans or bonds, where interest expenses can significantly affect profitability.

By avoiding these costs, a company can enhance its overall financial health and allocate resources more efficiently towards growth initiatives, projects, or other operational needs without the burden of interest payments. This characteristic makes retained earnings a cost-effective source of funding compared to other forms of capital.

The other options do not reflect the benefits associated with using retained earnings. For instance, retained earnings are available to all shareholders and represent a form of equity rather than a debt obligation. Additionally, while retained earnings can provide funding for immediate requirements, this is not guaranteed and can depend on the amount of earnings retained and the company's overall financial strategy.