Retained earnings

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Retained earnings

Accounting earnings that are retained by the firm for reinvestment in its operations; earnings that are not paid out as dividends.

Undistributed Profits

The amount of a publicly-traded company's post-tax earnings that are not paid in dividends. Most earnings retained are re-invested into the company's operations. Year-on-year tracking of the ratio of undistributed profits to dividends is important to fundamental analysis to investigate whether a company is increasing or decreasing its rate of re-investment. Undistributed profits form part of a company's equity, and are owned by shareholders. They are also called retained earnings, accumulated profits, undivided profits, and earned surplus.

retained earnings

The accumulated net income that has been retained for reinvestment in the business rather than being paid out in dividends to stockholders. Net income that is retained in the business can be used to acquire additional income-earning assets that result in increased income in future years. Retained earnings is a part of the owners' equity section of a firm's balance sheet. Also called earned surplus, surplus, undistributed profits. See also accumulated earnings tax, restricted retained earnings, statement of retained earnings.

Retained earnings.

Retained earnings, also known as retained surplus, are the portion of a company's profits that it keeps to reinvest in the business or pay off debt, rather than paying them out as dividends to its investors.

Retained earnings are one component of the corporation's net worth and increase the supply of cash that's available for acquisitions, repurchase of outstanding shares, or other expenditures the board of directors authorizes.

Smaller and faster-growing companies tend to have a high ratio of retained earnings to fuel research and development plus new product expansion. Mature firms, on the other hand, tend to pay out a higher percentage of their profits as dividends.

References in periodicals archive ?
We should also have to reduce par value to wipe out retained losses.'
"With this protection over aggregated retained losses, the insured may also take a higher retention and save risk transfer premium dollars," says O'Brien.
This 38 percent increase can be attributed to the substantial sustained losses reported by a few respondents, along with an overall trend toward generally higher retained losses, the survey notes.
For example, an aggregate catastrophe cover would pick up the accumulation of retained losses above either a dollar or loss ratio retention.
Where retained losses have a differential effect on how we use loss prevention and control measures, other disruptions to rational risk management strategies can occur.
The obvious purposes of an actuarial report include a reserve estimate to support the company's financial statements and an estimate of retained losses for the upcoming year to support the company's budgeting process.
This is the lowest number for companies since 2001 and came due to lower premiums and retained losses (especially within workers comp and D&O).
During a merger, it's important that the risk manager from the acquiring company confer with his counterpart to determine the other company's perception of risk, what model they have been using, whether they have a more conservative posture toward limits and retained losses, and if" they have identified and dealt well with all their exposures, said Austin, now principal and consultant at Austin & Stanovich Risk Managers LLC, Douglas, Mass., and Providence, R.I.
Increasing risk retention generally leads to a lower expected cost of risk (defined as the expected cost of retained losses and the cost of risk transfer).
Under such a treaty, for example, XYZ Re, in exchange for an agreed-upon premium, could agree to reimburse ABC P&C as and to the extent that ABC's retained losses from a single event (for example, one hurricane) exceeded $5 million.