What is Retained Earnings (3 Uses)

Get a Detailed article on What is Retained Earnings, It represents the cumulative sum of a company’s profits that are reinvested in the business rather than distributed as dividends to shareholders. It reflects the portion of net income retained for future growth, debt reduction, or operational needs. As a key component of shareholders’ equity on the balance sheet, retained earnings demonstrate a company’s ability to generate profits and sustain long-term financial health. Monitoring changes in retained earnings over time provides insights into a company’s profitability, financial stability, and capacity to fund internal initiatives without relying on external financing.