retained earnings

  

Definition

Profits generated by a company that are not distributed to stockholders (shareholders) as dividends but are either reinvested in the business or kept as a reserve for specific objectives (such as to pay off a debt or purchase a capital asset).

A balance sheet figure shown under the heading retained earnings is the sum of all profits retained since the company's inception. Retained earnings are reduced by losses, and are also called accumulated earnings, accumulated profit, accumulated income, accumulated surplus, earned surplus, undistributed earnings, or undivided profits. See also retention ratio.


Use retained earnings in a sentence

  • Despite stockholder's concern, the company continued to raise their retained earnings, because they needed to complete their debt payments from the last year.

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  • I wanted to perform a quick calculation of the retained earnings of the company so I had to first obtain the stockholders equity.

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  • Some of your retained earnings should be funneled back into the business to try and generate future bigger returns for you.

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