Answered: How can the retained earnings indicate…

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How can the retained earnings indicate the number of assets that the company has financed?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter12: The Cost Of Capital

Section: Chapter Questions

Problem 1QTD

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Question

How can the retained earnings indicate the number of assets that the company has financed?

Definition Definition Remaining net income of the company after the required dividends are paid to shareholders. This surplus money is usually invested back into the business to expand its business operations or launch a new product.

Expert Solution

Step 1

Retained Earnings:

It is the amount which is earned by the company as a profit from business operations and is left undistributed among stockholders.

It is reinvested in the company for the future needs of funds for business activities.

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