Retained Earnings

What are Retained Earnings?

Retained Earnings refer to the cumulative amount of profit a company holds back or retains after dividends have been paid to shareholders. These earnings are reinvested into the business to fund operations, pay off debt, or invest in new opportunities.

Short Description: The portion of a company's profits that are kept in the company rather than distributed to shareholders as dividends.

• Reinvestment: Retained Earnings can be used for expanding business operations or improving infrastructure.
• Debt Repayment: Allows a company to pay down existing debts without securing new loans.
• Reserves: Acts as a financial buffer for future business uncertainties or losses.

Understanding retained earnings is crucial as it reflects the company's reinvestment strategy and capacity to fund its growth internally.