Glossary Terms

Retained Earnings

Retained earnings, also known as retention ratio or retained surplus, is a business term referring to the net earnings retained by a company to reinvest in its business or to pay debt.

Retained earnings, also known as retention ratio or retained surplus, is a business term referring to the net earnings retained by a company to reinvest in its business or to pay debt.

Retained earnings are recorded under shareholders’ equity on a company’s balance sheet, and are calculated by subtracting dividends from net income plus previous retained earnings.