In accounting, retained earnings refers to the portion of
net income of a corporation that is retained by the corporation rather than
distributed to shareholders as dividends. Similarly, if the corporation incurs
a loss, then that loss reduces the corporation's retained earnings balance.
If your balance of the retained earnings account is negative
it may be called retained losses, accumulated losses or accumulated deficit. Retained earnings
and losses are cumulative from year to year.
Retained earnings represent how the company has managed its
profits (i.e. whether it has distributed them as dividends or reinvested them
in the business). And, therefore, reflect your company’s dividend- and capital
structure policy that I will cover in the Cash
Flows Statement section.
No comments:
Post a Comment