Rhylan
- Created by: Coral Webberley
- Created on: 02-02-23 10:13
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- Retained earnings
- Retained earning is profit after tax retained in an company rather than paid out to shareholder as dividends
- Internal
- Short-term
- Internal
- Advantages
- Increased stock value. Keeping your company earnings increases your balance sheet, which has a knock-on effect to stockholder equity and corresponding stock value. ...Financial safety net. ...Funding for growth.
- Diadvantage
- One risky reason why companies should avoid retained earnings is that it can lead to tax evasion. Some might attempt to ease the tax burden by keeping profits. Some shareholders who don't have an immediate need for dividends might vote against its distribution to avoid providing income tax
- One risky reason why companies should avoid retained earnings is that it can lead to tax evasion. Some might attempt to ease the tax burden by keeping profits. Some shareholders who don't have an immediate need for dividends might vote against its distribution to avoid providing income tax
- The business provides it's own finance. This money comes from the extra profits that have been left from the end of the year.
- Every business can use retained earnings but urm it would mostly be used by larger businesses that have been trading for a whil
- Retained earning is profit after tax retained in an company rather than paid out to shareholder as dividends
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