accountinglads
4 posts
Jul 14, 2025
4:40 AM
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Retained earnings are net income that an organization has not paid to a shareholder in the form of dividends. They are displayed in Equity part of the balance sheet of a company. In some instances, the amount of profits retained over time can be very high including in expanding companies that may not distribute all the profits. These are essential in self financing the running of a business, expansion capital and maintaining the financial status. The retained earnings indicate the profitability of a firm and the readiness of its management to reinvest its money instead of distributing it among its shareholders, which proves the intentions of the company as one of the long-term financing.
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