A company may reinvest earnings instead of paying out dividends.
These earnings do not necessarily sit in a retained earnings account, but are used to improve the business and make it more profitable. This could even include paying off debt.
Retained earnings is found in the Shareholder’s Equity portion of a company’s balance sheet. Despite the fact that earnings have not been dispensed to them in the form of dividends or share buybacks, shareholders will see the value of their stock appreciate when earnings are retained and used to grow the business.
Common uses of retained earnings are to fund a new round of hiring, upgrading equipment, or acquiring a small company. This can also be called “retained surplus,” or even viewed as a “retention ratio.”
The Retention Ratio is the opposite of the Payout Ratio, which is the percentage of net income which is paid out as dividends. The Retention Ratio can also be called the Plowback Ratio, as in the amount of money that is plowed back in to the company to fuel future growth.
Retained earnings is a running total of net income which is directed back into the company, so each year’s retained earnings are added to the total from the years before.
MACD is an acronym for Moving Average Convergence Divergence. It is a momentum oscillator primarily used to in technical analysis to trade trends
A 10-k is an annual filing required by the SEC for companies over $10 Mil, which provides the regulators with more detail
Compounding refers to when your asset generates interest. Put simply, it’s when your earnings generate additional earnings
The Federal Open Market Committee (FOMC) is the monetary policy-making body of the Federal Reserve System
Adjusted Gross Margin accounts for the cost of maintaining inventory, which regular Gross Margin does not
B2/B ratings are the 15th ratings down the scale from the top. A bond in the B range has about a 20% chance of defaulting
Life insurance contracts sometimes contain provisions where death benefits can be paid out while alive. Called “accelerating”
Earnings Before Interest, Taxes, and Depreciation (EBITD) is one method of viewing the earnings of a company with...
The laws concerning a legal residence or primary residence may come into play for purposes of insurance, state taxes...
A living trust describes a trust designed to transfer assets to beneficiaries upon the death of the owner/grantor