Question

What are the determinants of retained earnings?

Answer 1

A corporation doesn’t give stockholders all the profit in dividends each year. It holds some profit as retained earnings for investment, capital expenditures or as protection against a net loss the following year. Warren Buffett looks at retained earnings to see how management handles the funds. An increase in retained earnings is a gauge of good corporate management, according to a 2008 article by John Reese at Forbes. Retained earnings are corporate funds not distributed as dividends that can increase the company earnings and attract investors