RETAINED EARNINGS Definition

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RETAINED EARNINGS are profits of the business that have not been paid out to the owners as of the balance sheet date. The earnings have been "retained" for use in the business (Retained Earnings is an account in the equity section of the balance sheet). It is comprised of the balance, either debit or credit, of appropriated or unappropriated earnings of an entity that are retained in the business. A good rate of growth in retained earnings is an indicator that the firm enjoys a sustainable competitive advantage. NOTE: Appropriated earnings are not available for dividends, but may be used to reduce a deficit or may be transferred to stated capital. Other appropriations of profits require a vote of the shareholders.

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INCOME APPROACH is a general way of determining a value indication of a business, business ownership interest, security, or intangible asset using one or more methods that convert anticipated benefits into a present single amount.

BEAR is an investor who expects share prices to fall and thus likely to sell short. More generally, a pessimist about the market outlook.

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