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What are retained earnings

What are retained earnings? Why are they important?

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Retained earnings stand for the sum of all the earnings which are available to common business stockholders during its entire history, minus the entire common stock dividend’s sum which it has ever paid. The earnings which were not paid out were retained.

Retained earnings are considered important because they represent amounts reinvested in a company on behalf of the company’s owners instead of being paid out in the form of dividends.

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