The accumulated profits of a company that are reinvested or retained for future use.
Retained Earnings refers to the accumulated profits of a small business that are retained within the company rather than distributed to shareholders as dividends. It represents the portion of net income that remains after deducting dividends and is reinvested back into the business. Retained earnings play a crucial role in supporting future growth and stability, allowing businesses to fund new projects, expand operations, repay debts, or build reserves. Small business owners can track the growth of retained earnings over time to assess the financial health and profitability of their company. It is an important indicator of a business's ability to generate internal funds and sustain long-term growth.