Retained earnings
Retained earnings are the part of a company’s income kept to accumulate, after dividends are paid. The company’s accumulated retained earnings appear on the balance sheet under owner’s equity. Retained earnings are declared each year on a Statement of retained earnings.
After a profitable period, a company can (at the discretion of its board of directors) pay some of its income to shareholders, as dividends, and keep the remainder as retained earnings.
See the encyclopedia entry for Statement of retained earnings for an example of the retained earnings statement and the calculations behind reported retained earnings.
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