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Definition
Retained earnings are the cumulative profits a company has earned and not distributed as dividends, shown in the equity section of the balance sheet. They're the main component of distributable reserves.
In plain terms
It's the profit you chose to leave in the business. That stored-up surplus is what pays for growth and what future dividends draw on.
Why it matters for your company
Strong retained earnings signal a self-funding, resilient company — and set the ceiling on lawful dividends. See company reserves.
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