Retained Earnings in Accounting and What They Can Tell You
If a company has no strong growth opportunities, investors would likely prefer to receive a dividend. Therefore, the company must balance declaring dividends and retained earnings for expansion. Your retained earnings balance will always increase any time you have positive net income, and it will decrease if your business has a net loss. Retained earnings can be used to purchase additional assets, pay down current liabilities, or they be held for possible future distribution. What type of account is a retained...