Retained earnings
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In accounting, retained earnings or retained profits are profits that have not been paid to a company's shareholders as dividends.
They are reported in the ownership equity section of a firm's balance sheet. A complete presention of the companies retained earnings position is presented in the Statement of retained earnings.
The decision of whether a firm should retain profits or disburse them as dividends depends on several factors including: the firm's judgement of its own investment opportunities relative to those available in the market and any difference in tax treatment of dividends paid now and capital gains expected to result from investing retained earnings. It is also called plow back, the act of putting earnings from sales back into the business operation.
See also
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