Corporate Risk & Valuation · Entry 12 of 71

What Are Retained Earnings?

Reinvesting profits for sustainable enterprise expansion

Core Definition

Retained Earnings are the accumulated net profits that a company keeps after paying out dividends to its shareholders, reinvested back into the business instead of being distributed as payouts.

Core Uses

1. Used to fund growth, expansion, or debt reduction: Enables organic capital investment without diluting equity or issuing new debt.
2. Reflects the company's reinvestment in its future operations: Often viewed by markets as a sign of sustainable, long-term capital compounding.