What is retained earnings?

[niyati]

I’ve come across the term retained earnings while looking at balance sheets, but I’m not sure what it actually means. Can someone explain what retained earnings are?

 

[Gsusangrey]

Retained earnings are the cumulative net profits a company keeps after paying dividends to shareholders. They are reinvested in the business for growth, debt repayment, or future payouts. Reported under shareholders' equity on the balance sheet.

 

[Jarwish]

Retained earnings are the amount of money that a company retains or brings into the business as opposed to paying out as dividends. They can be used to finance expansion, they can settle liabilities, or accumulate to be used later, indicating amassed profit in the long term.

 

[rajat]

Retained earnings refer to the portion of a company’s net income that is kept or "retained" rather than paid out as dividends to shareholders. This amount is reinvested in the business, often for purposes like funding operations, paying off debt, or investing in growth. Retained earnings accumulate over time and are reported on the company’s balance sheet under shareholders' equity, reflecting the company's ability to generate profit and reinvest it for future growth.