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TERM OF THE DAY

Retained Earnings Retained earnings refer to the percentage of net earnings not paid out as dividends, but retained by the company to be reinvested in its core business, or to pay debt. It is recorded under shareholders' equity on the balance sheet. The formula calculates retained earnings by adding net income to, or subtracting any net losses from, beginning retained earnings, and subtracting any dividends paid to shareholders.

Breaking it Down: In most cases, companies retain earnings in order to invest them into areas where the company can create growth opportunities... Read More

Related to "Retained Earnings"

Evaluating Retained Earnings: What Gets Kept Counts A company's retained earnings matter. Be investment-savvy and learn how to analyze this often overlooked information. Read More How are retained earnings related to a company's income statement? Understand what a company's statement of retained earnings represents and how it is related to a company's other financial statements. Read More How is revenue related to retained earnings? Learn what business revenue is and how it relates to retained earnings. See how accountants calculate these key figures and why investors follow them.Read More

RELATED DEFINITIONS Statement Of Retained Earnings A financial statement outlining the changes in retained earnings for a specified period. Appropriated Retained Earnings Any unappropriated retained earnings that are specifically not to be used for dividend payments.  RELATED DEFINITIONS Closing Entry A journal entry made at the end of the accounting period. The closing entry is used to transfer data in the temporary accounts to the permanent balance sheet or income statement accounts. Retainer Fee An upfront cost incurred by an individual in order to ensure the services of a consultant, freelancer, etc.