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 ?
31, 2006 2005 Assets Current assets Cash and cash equivalents $299 $77 Accounts receivable, net 2,016 1,661 Inventories, net 2,423 2,194 Other current assets 147 169 Total current assets 4,885 4,101 Property, net 130 148 Debt issue costs and other, net 391 297 Total assets $5,406 $4,546 Liabilities and Stockholders' Deficit Current liabilities Accounts payable $783 $425 Bank line of credit 2,596 2,630 Accrued liabilities 1,041 1,101 Current portions of long-term obligations 3,862 133 Total current liabilities 8,282 4,289 Long-term debt 4,242 3,683 10% senior subordinated convertible debt - 3,630 Total stockholders' deficit (7,118) (7,056) Total liabilities and stockholders' deficit $5,406 $4,546
31, 2005 2004 Assets Current assets Cash and cash equivalents $346 $166 Accounts receivable, net 1,552 2,035 Inventories, net 2,541 3,057 Other current assets 148 189 Total current assets 4,587 5,447 Property, plant and equipment, net 169 270 Debt issuance costs and other, net 349 405 Total assets $5,105 $6,122 Liabilities and Stockholders' Deficit Current liabilities Line of credit $1,778 $1,583 Accounts payable 359 967 Accrued Liabilities 1,024 1,093 Current portion of long-term debt 1,341 67 Total current liabilities $4,502 $3,710 Long-term portion of lease payable 271 - Long-term convertible note 2,325 1,458 10% senior subordinated convertible debt 3,630 3,630 Total stockholders' deficit (5,623) (2,676) Total liabilities and stockholders' deficit $5,105 $6,122
AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) March 31, March 31, 2005 2004 ASSETS Total current assets $ 7,448 $ 8,324 Total assets $ 10,231 $ 21,056 LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS' DEFICIT Current liabilities: Total current liabilities $ 9,099 $ 13,171 Total liabilities 56,291 65,334 Minority interest in joint venture - 4,484 Redeemable convertible preferred stock 8,582 8,032 Total stockholders' deficit (54,641) (56,794) Total liabilities, preferred stock and stockholders' deficit $ 10,231 $ 21,056 VALENCE TECHNOLOGY, INC.