key term - Retained earnings

Definition

Retained earnings are the portion of a company's profits not distributed to shareholders as dividends but kept in the company to reinvest in its core business or to pay off debt. They are found under shareholders' equity on the balance sheet.

Related terms

Dividends:

Payments made by a corporation to its shareholder members, often derived from the company's profits.

Balance Sheet:

A financial statement that reports a company's assets, liabilities, and shareholders' equity at a specific point in time.

Shareholders' Equity:

The residual interest in the assets of the entity after deducting liabilities, representing ownership interest in the company