Question

what are retained earnings?Please cite source

Answer 1

Answer:

Retained earnings- It is the amount of Net profit that is retained by the company and not distributed in the form of dividend to shareholders or you can say that Retained earnings is the amount that is leftover after paying the dividend. Money that is not paid to shareholders is the retained earnings.

Objective of retained earnings- Companies retained some profit so as to reinvest it for growth purpose, companies that do not pay good dividends out of the profit, retain it so as to further reinvest it for expansion and growth, that is the reason companies grow and their stock prices also go up, these stocks are called Growth stocks.